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Bitcoin rises on futures trading debut on major US exchange | |
(about 4 hours later) | |
Bitcoin has begun trading on a major exchange for the first time in what is being regarded as a step towards legitimising the digital currency. | Bitcoin has begun trading on a major exchange for the first time in what is being regarded as a step towards legitimising the digital currency. |
Trading opened at 23:00 GMT Sunday on the Cboe Futures Exchange in Chicago, valuing Bitcoin at $15,000. | Trading opened at 23:00 GMT Sunday on the Cboe Futures Exchange in Chicago, valuing Bitcoin at $15,000. |
The currency's futures were volatile for the first 20 minutes, rising to about $16,600 before dropping back. | The currency's futures were volatile for the first 20 minutes, rising to about $16,600 before dropping back. |
Bob Fitzsimmons at Wedbush Securities said about 150 trades were made in the first few minutes: "It's quiet." | Bob Fitzsimmons at Wedbush Securities said about 150 trades were made in the first few minutes: "It's quiet." |
The Cboe's move is expected to be followed next week by a rival listing on the Chicago Mercantile Exchange. | The Cboe's move is expected to be followed next week by a rival listing on the Chicago Mercantile Exchange. |
Anticipation of the first mainstream listings have helped the controversial currency soar past $10,000 and then over $17,000 on Thursday before retreating. Bitcoin was trading at about $15,230 on Monday, according to Coindesk.com. | Anticipation of the first mainstream listings have helped the controversial currency soar past $10,000 and then over $17,000 on Thursday before retreating. Bitcoin was trading at about $15,230 on Monday, according to Coindesk.com. |
Nick Colas, of Data Trek research, said the futures listings gave Bitcoin "legitimacy - it recognises that it's an asset you can trade". | Nick Colas, of Data Trek research, said the futures listings gave Bitcoin "legitimacy - it recognises that it's an asset you can trade". |
Futures are a type of derivative contract that allows trading based on movements in Bitcoin prices, without requiring ownership of the currency itself. | Futures are a type of derivative contract that allows trading based on movements in Bitcoin prices, without requiring ownership of the currency itself. |
The start of the Cboe market was low key, with "no champagne", an exchange insider said. | The start of the Cboe market was low key, with "no champagne", an exchange insider said. |
However, Cboe tweeted to warn that its website was running slowly and could be temporarily unavailable, but that all trading systems were operating normally. | However, Cboe tweeted to warn that its website was running slowly and could be temporarily unavailable, but that all trading systems were operating normally. |
What is Bitcoin? | What is Bitcoin? |
The Cboe and CME launches were made possible following approval by the US Commodities and Futures Trading Commission (CFTC). | The Cboe and CME launches were made possible following approval by the US Commodities and Futures Trading Commission (CFTC). |
However, the regulator has warned investors about the "potentially high level of volatility and risk in trading these contracts". | However, the regulator has warned investors about the "potentially high level of volatility and risk in trading these contracts". |
Its supporters include the Winklevoss twins, who have been called the first Bitcoin billionaires, while critics include CNBC financial commentator Jim Cramer. | Its supporters include the Winklevoss twins, who have been called the first Bitcoin billionaires, while critics include CNBC financial commentator Jim Cramer. |
He argues that futures trading opens the door to "short sellers" that bet on downward moves in asset prices. | He argues that futures trading opens the door to "short sellers" that bet on downward moves in asset prices. |
Bitcoin is not regulated by any country's central bank and has no universally recognised exchange rate. | Bitcoin is not regulated by any country's central bank and has no universally recognised exchange rate. |
Cboe said trading will be suspended for two minutes if Bitcoin prices rise or fall by 10% in a bid to reduce wild fluctuations. | Cboe said trading will be suspended for two minutes if Bitcoin prices rise or fall by 10% in a bid to reduce wild fluctuations. |
"We are committed to continue to work closely with the CFTC to monitor trading and foster the growth of a transparent, liquid and fair Bitcoin futures market," the Cboe said. | "We are committed to continue to work closely with the CFTC to monitor trading and foster the growth of a transparent, liquid and fair Bitcoin futures market," the Cboe said. |
The Futures Industry Association, which includes some of the world's biggest derivatives brokerages, has criticised the CFTC's decision, arguing that insufficient attention has been paid to the risks involved. | The Futures Industry Association, which includes some of the world's biggest derivatives brokerages, has criticised the CFTC's decision, arguing that insufficient attention has been paid to the risks involved. |