The controversial digital currency bitcoin starts into a new era – and continues to rise. Since sunday night, bitcoin futures have been the first financial product that allows the internet currency to be traded on regulated exchanges.
Investors can use it to bet on rising and falling bitcoin prices. The start of trading had been eagerly awaited, as the digital currency, which has risen sharply of late, thus takes a rough step into the traditional financial world.
After a bumpy start on the chicago options exchange CBOE, trading quickly gained momentum on monday. The price of the bitcoin futures contract, which runs until mid-january, shot up by more than a quarter – so fast that the exchange operator took advantage of previously established rules and suspended trading.
Unimpressed by this, the price of bitcoin futures rose temporarily to 18,850 dollars and settled in the afternoon around 18,000 dollars. Despite the teething problems, the CBOE was credited with its pioneering work. The company’s share price rose after the start of trading in the U.S.
The start of the futures also boosted the price of bitcoin itself: on the bitstamp trading platform, one bitcoin last cost around 16,200 dollars, significantly more than on sunday.
With future contracts, commodities or financial products are traded at a predetermined price for a future point in time. Buyers and sellers can thus hedge against price fluctuations. Risks arise when one of the two parties is unable to fulfill the contract. The more the price of the product fluctuates, the greater the likelihood that the promise will not be honored. If futures transactions burst, dangerous domino effects are possible.
It is also possible to speculate on price developments – even on a decline in value. Thanks to futures trading, critics of the digital currency can also speculate against bitcoin. In the past few days, the digital currency had fluctuated even more than before due to the increasing nervousness before the start of the future.
Since wednesday last week, bitcoin prices have bounced back and forth between around 11,600 dollars and 16,600 dollars. Even stronger were the strikes at the trading platform coinbase, where the bitcoin had briefly cost almost 20 000 dollars on thursday evening.
The still high differences in the quotations on different platforms are further proof of how opaque and difficult to assess the bitcoin market is. On monday, however, the gap in the trading session narrowed somewhat. In the afternoon, the difference between the coinbase and bitstamp platforms was around $400. In the morning, it was at times more than 1000 dollars and in the days before there had been much wider gaps.
Many observers fear that new market dislocations could occur in the coming days with the launch of bitcoin financial products on more established U.S. Exchanges. Next week, the world’s largest exchange operator CME also plans to launch a bitcoin future.
At the beginning of the year the value of the bitcoin was still at 1000 dollars. Since then, it has been on a rapid record chase, which has accelerated increasingly in recent months and is accompanied by sometimes high price fluctuations. Central bankers and experts warn of the unpredictability of digital currency. Even leading bankers are skeptical.
The "wirtschaftsweise" isabel schnabel warned over the weekend of possible systemic risks after the future start-up. If the internet currency were to penetrate the established financial world from a niche, there would be risks: "the price development of bitcoins is reminiscent of the major bubbles in economic history, such as the tulip crisis. As long as the speculations are financed with equity, the investors lose a lot of money in the event of a crash, but the risks of contagion should be limited," she told "welt am sonntag".