Dubai: Bitcoin rose more than $3,300 (Dh12,119 — or 20 per cent) on Monday following the launch of Bitcoin futures on the Chicago Board Options Exchange (CBOE), the first legitimate exchange to trade in the cryptocurrency.
The meteoric rise of Bitcoin prices has caught the fancy of everyone from amateur investors to ultra high net worth individuals.
The digital currency has given returns of more than 1,600 per cent since the start of the year despite a negative opinions from traditional banks like JP Morgan or UBS.
Many investors see the launch of futures contracts as the first step in making the massively volatile cryptocurrency a part of the mainstream.
“The launch of futures’ trading could act as a turning point for Bitcoin, moving it towards a more mainstream rather than a tertiary instrument. It is important from a price aspect as well. The introduction of futures is expected to reduce the volatility in the crypto currency because it will be more difficult for any one trader or event to swing the market,” Konstantinos Anthis, head of research, ADS Securities told Gulf News.
Bitcoin for January delivery on the CBOE jumped to as high as $18,850, before trading $2,500 higher at $18,010 at 7pm local time, with reports of outage on the first trading day on Sunday. In the spot market, Bitcoin was trading 6.83 per cent higher at $16,517.
However, the price remained in a relatively stable price range following the launch of the contracts, ending almost four days of volatile price swings.
“So far, it seems professional investors aren’t willing to bet against the bitcoin, despite the many warnings of a bubble that will burst soon,” Hussain Sayed, Chief Market Strategist at FXTM said.
Many experts had called the cryptocurrency as a bubble, which reminded some of the Tulip mania of the 16th century, the first modern example of what can happen in an over-heated market.
“Many traders aren’t even interested in the price direction, but the listing of the futures contract on CBOE and later next week on the CME, will provide them an arbitrage trading opportunity due to the vast pricing differences. However, the arbitrage trading will lead to improved price efficiency and probably less volatility. After volatility settles down, the focus will return to the price direction,” Sayed said.
