Most of the action this week has been with the altcoins and Bitcoin has been relatively stable. Ethereum, Litecoin and Ripple all reached record highs and have hugely expanded their market capacities. Bitcoin has slowly inched up from $16,400 to around $17,600 where it currently trades, things could heat up again over the weekend though as more futures contracts will be launched.
The start of futures trading on the Chicago Board Options Exchange has been slow and steady. More significantly it has been hailed as a turning point for Bitcoin and crypto currency giving it more recognition with a little long overdue regulation and transparency. This elevated status will be given a further boost in the coming days as two more players enter the game.
The Chicago Mercantile Exchange, a much larger exchange than the CBOE, will launch its Bitcoin futures on Sunday. It is expected to attract higher volumes and a higher dollar value of trading so Bitcoin prices could well hit $20,000. The third exchange to offer Bitcoin trading is TD Ameritrade which controls the largest futures operation of any online brokerage firm. The company recently announced that it will allow Bitcoin futures contracts on its platform on Monday. This will result in a lot more liquidity and a lot more participation from retail traders.
Clients must have a minimum balance of $25,000, in order to participate in the futures according to the brokerage. The margin requirement will also be 1.5 times what the CBOE requires. JB Mackenzie, managing director for futures trading at TD Ameritrade, told Bloomberg:
“Right now we are taking the same approach we did with the Cboe product, to wait and see how it goes. We want to watch that market open and become an orderly marketplace and see who the participants are in that marketplace. This is the same process we use with any new product. We want to see how the market reacts.”
Volume on the CBOE contracts that have been trading over the past week has been a little on the low side according to a CNBC report. Around $60 million in notional value has traded each day on average. Compare that to the last 24 hours in the Bitcoin market which stands a volume of $12 billion according to Coinmarketcap.com.
The majority of crypto currency traders are based in Asia, outside the US where futures contracts are not available and the digital currency is traded directly. Only when the heavyweights such as JP Morgan Chase and Morgan Stanley allow their clients to trade crypto currency will things really heat up for institutional investors. Even so, there is still likely to be more action on the Bitcoin charts this weekend, get ready for the ride!
Photo courtesy of Reuters.