Tonight the Chicago Board Options Exchange (CBOE) is due to launch its Bitcoin futures contract. A Bitcoin futures contract is a financial instrument, tied to the Bitcoin, allowing investors to speculate on whether the price of Bitcoin will rise or fall.
Whether this is a good thing or not all depends on the level of volatility being experienced at any given time and with so many peaks and troughs over recent days it makes you wonder who would enter the market, whether long or short,
Many participants will be reluctant to enter the market now, either as long or as short, at margins likely to be set at 35%, which probably looks low at current levels of volatility.
Is this the time for a new wave of professional money to find its way into Bitcoin?
On paper at least a Bitcoin futures contract would ease the flow of cash into this burgeoning cryptocurrency and with all the talk of the Bitcoin bubble bursting, a great way for traders and speculators to to short it.
Looks risky to me given the rollercoaster price performance we saw last week
It is seen as a key moment because it will allow a new wave of professional money to go into Bitcoin, as well as providing an easy way to deal on the margin.
Since many in high finance see Bitcoin’s meteoric rise in recent weeks as a classic bubble, a few might be tempted to bet against it. On the other hand, the leaps in its price last week mean it might not be a risk worth taking.
It’s likely that volumes will be slow initially as speculators dip their toe in the water.
The CBOE futures exchange is due to be live tonight at 11pm GMT.