Bitcoin future trading has launched in America with the Chicago Board Options Exchange (Cboe: XBT) offering investors the chance to bet or hedge on the upcoming price of Bitcoin across January, February and March.
For those unable to invest directly in Bitcoin, it provides a way to trade on the short-term future direction of the cryptocurrency, or for those holding Bitcoin, it can act as a hedge if the actual price goes in the opposite direction to where they believe it will head.
The Chicago board is using the Gemini exchange as a source of the final settlement value of the contracts. With prices continuing to surge, using futures allows major investors to dabble in the market and also creates additional credibility for the currency.
Other benefits include greater diversity among investors and it provides an alternative data point other than the rodeo that is the price of Bitcoin, allowing institutional investors to form a trading position as the futures market settles down.
The Future of The Future For Bitcoin
Naturally, opinions will vary wildly on the future direction of Bitcoin, with many coin holders and investors looking for a continuing bull rush. However, more traditional investors will be looking for the end of the current spectacular ride and the technology-led currency to settle down as legal issues and directionality around the world are sorted out.
Institutions will also come under pressure from clients to invest in Bitcoin, and this provides a route that doesn’t require wallets or in-depth knowledge of the underlying technology.
Bitcoin’s future price may also be constrained by a variety of factors. It will be challenged by rival currencies, with Ripple, Ethereum, Bitcoin Cash and others continuing to gain interest. There are also calls for a number of nation-led variants that are under discussion in many, notably authoritarian states.
These and many other factors could signal an end to the Bitcoin rainbow, but for now, the arrival of futures can be seen as a positive sign, adding a feel of legitimacy to the often stigmatized currency.
Expect other exchanges around the world to open up with cryptocurrency futures soon enough.