Coverage: Bitcoin futures begin trading

Bitcoin prices jumped on Sunday evening right as the Cboe Futures Exchange began trading futures on the cryptocurrency.

Fred Imbert of CNBC.com had the news:

The digital currency was at $14,890 right at 6 p.m. New York time and then surged about $600 to $15,500.13 as of 7:17 p.m. on the Coinbase exchange.

The new futures were up 2.6 percent to $15,860 on the Cboe in very early trading. They also turned negative for a brief moment at about 6:55 p.m. New York time before bouncing back.The exchange launched the futures under the ‘XBT’ ticker symbol following a huge ramp-up in the digital currency’s price this year.

“So far, trading has been smooth. I think that was the biggest worry for people” heading into the launch, said JJ Kinahan, chief market strategist at TD Ameritrade. “We’ve been trading for about an hour and more than 700 contracts have been traded. So, I’d say this is a successful launch.”

Interest was so great in the new product, it appeared to be overloading Cboe’s website. “Due to heavy traffic on our website, visitors to http://www.cboe.com may find that it is performing slower than usual and may at times be temporarily unavailable,” the exchange said in a statement. “All trading systems are operating normally.”

Jeremy Herron of Bloomberg News reported that the futures may bring in institutional investors:

The futures contracts may open the door to greater inflows of institutional money, while also making it easier to bet on bitcoin’s decline. The entrance of regulated exchanges enables professional investors who have been unwilling to do business on the unregulated platforms where bitcoin currently trades to place bets on bitcoin’s price.

They’ll be watching for the wild swings that have become a hallmark of bitcoin trading in recent months, with four moves of at least 10 percent in the past two weeks alone. Such volatility could trigger trading limits in the futures, though many investors speculate the contracts will improve price discovery.

Bitcoin’s volatility was on full display Thursday. On Coinbase Inc.’s GDAX exchange, prices zoomed up to almost $20,000 from $16,000 in only about 90 minutes — then crashed back down. Coinbase temporarily crashed and continued to suffer from service delays as prices fell. One of the largest U.S. online exchanges used by investors, Coinbase had prices $3,000 higher than on other exchanges at the height of the turmoil.

John Detrixhe of Quartz focused on Akuna Capital, the firm that was the first to buy and sell derivatives:

Chicago has been a trading hub for more than a century. News that two of the city’s global exchanges would create bitcoin futures — which allow traders to speculate on the cryptocurrency’s price at a later date — has fueled a boom in bitcoin in anticipation. It’s seen as a sign that major financial firms are about to embrace the decentralized digital asset. If it doesn’t self-destruct before the institutional money arrives, some think bitcoin could become a digital form of gold.

That’s where Akuna comes in. The six-year-old company was founded by a pair of Aussies who had worked at Optiver, one of the world’s biggest professional trading outfits for options. The proprietary trading firm (it uses its own money to buy and sell) is based at “Big Red” on 333 South Wabash Avenue, one of Chicago’s most recognizable office towers, and has about 160 employees. Some of them still trade over the phone, and others work from the shrinking trading floors that still exist in the city.