First Bitcoin Futures Contract Settles at $10,900 and the Bears Won Round #1

By
Josiah Wilmoth @Y3llowb1ackbird
January 18, 2018

Bears 1. Bulls 0. That’s the score following the settlement of CBOE’s January bitcoin futures contracts, which closed on Wednesday at $10,900 following a steep correction in the spot markets.

First Bitcoin Futures Contract Settles at $10,900 as Bears Win Round One

CBOE had listed these contracts on Dec. 10, making them the first bitcoin futures products available on a regulated US exchange. CME launched its own bitcoin futures a week later.

According to Reuters, positions in CBOE’s contracts “leaned to the short side” in early January, a bet that paid dividends due to this week’s dramatic market correction.

Even though the underlying spot market fluctuated wildly during the past week, CBOE Chief Executive Officer Ed Tilly was quoted in the Financial Times as saying that the “market experienced a smooth operational close and the settlement process worked as designed.”

“This is an encouraging initial milestone, and we look forward to working with customers to power the growth of this nascent market,” Tilly added in a press release.

Volume Increases But Still a Minor Player

Many traders rolled their closing positions into other contracts that settle later on, which helped raise CBOE’s single-day volume to a new all-time high of 15,424 contracts, which equates to approximately $168 million in trades based on yesterday’s settlement price.

Nevertheless, bitcoin futures volume still pales in comparison to that of the global spot market, which saw approximately $19 billion in bitcoin change hands over the past 24 hours.

However, futures volume continues to increase, largely because a growing number of brokerage firms have decided to begin processing trades for these nascent products.

Morgan Stanley is the latest firm to offer this service to its clients, joining Goldman Sachs as the only major Wall Street firms to do so.

“If someone wants to do a trade on the futures and settle in cash, we’ll do that,” Morgan Stanley Chief Financial Officer Jonathan Pruzan said on Thursday. “I wouldn’t say it’s been a lot of activity, but it’s for core institutional clients who want to participate in a derivatives transaction.”

Featured image from Shutterstock.