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Bitcoin futures climb 19% in first day of trading

12/12/2017

Bitcoin futures (XBT) climbed 19% in first day of trading on the CBOE with two breaks in trading to avoid overheating. Volumes were modest however, with a little over 4,100 contracts traded, reflecting the cautiousness surrounding investment into an asset that certainly has all the appearances of a bubble. However, if there's been one constant refrain that has been a prelude to losing money in trading rooms around the globe, it's the phrase "I can't afford to buy it up here", inevitably followed by the speaker buying the asset in question at a much higher price. The BTC market is still acting as if it's short. There is huge demand to buy BTC below $10,000 now, there are few people willing to buy at current levels for fear of looking foolish, and even fewer people willing to trade against the market and build a short position.

Whilst there is plenty of upside remaining, it's also reasonable to assume that it's rocket-like trajectory cannot be maintained in the way some pundits (presumably those with Long positions) are suggesting. What the BTC market needs in order to develop maturity is a period of consolidation, which cannot happen until the market develops a liquidity pool that can tolerate Supply & Demand with greater stability than has been displayed recently.

The Chicago Mercantile Exchange (CME), and 'big brother' to the CBOE will launch BTC futures on December 18th. It remains to be seen whether this will provide the depth of market that can smooth out the path for BTC.

At the time of writing, BTCUSD is trading around US$16,750

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