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Bitcoin futures trading begins on CBOE exchange in Chicago | Bitcoin futures trading begins on CBOE exchange in Chicago |
(35 minutes later) | |
Bitcoin has begun trading on a major exchange for the first time. | Bitcoin has begun trading on a major exchange for the first time. |
It launched on the CBOE futures exchange in Chicago at 23:00 GMT Sunday, allowing investors to bet on whether Bitcoin prices will rise or fall. | |
In the lead-up to its futures debut, the value of the digital currency has surged. | In the lead-up to its futures debut, the value of the digital currency has surged. |
Bitcoin's introduction to the CBOE has been seen by some as a step towards legitimising the currency. | Bitcoin's introduction to the CBOE has been seen by some as a step towards legitimising the currency. |
The move is expected to be followed next week by a listing on the rival Chicago Mercantile Exchange. | |
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. |
CBOE trading saw the Bitcoin futures contract expiring in January rise 17% from $15,000 to above $18,000. | |
An exchange insider said its start was low key, with "no champagne". However, CBOE tweeted to warn that its website was running slowly and could be temporarily unavailable. | |
Anticipation of the first mainstream listings have helped the controversial currency soar past $10,000 and then over $17,000 on Thursday before retreating. The price of Bitcoin stood at about $16,600 on Monday, according to Coindesk.com. | |
'Out of the shadows' | |
Nick Colas, of Data Trek research, said the futures listings gave Bitcoin "legitimacy - it recognises that it's an asset you can trade". | |
Chris Ralph, chief investment officer at St James's Place told the BBC's Today programme that he remained cautious about the currency. | |
"I refuse to use the word legitimate, but it's probably moved out of the shadows into the open," he said. | |
"But what I think it means is more people in the conventional investment banking market will take a look at Bitcoin. | |
"It has been described as the asset class of 2017 but when we went into the year no one would have called it an asset class." | |
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 says trading will be suspended for two minutes if Bitcoin prices rise or fall by 10%, in an attempt 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," 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. |