The price of Bitcoin bounced back from a 4pc fall that followed the launch of a new set of futures in the cryptocurrency by the world’s largest exchange provider CME in Chicago.
Its value on the Coinbase exchange fell from $19,375 at midnight UK time to around $18,400 in the early morning. But it then rallied to around $19,100 by breakfast time.
Bitcoin advocates hope the launch of futures trading on CME will help confer legitimacy on the young cryptocurrency and reduce volatility, and ultimately underpin further price rises, the Telegraph reported.
Cboe Global Markets Inc launched a bitcoin futures contract on Dec. 10. Trading volume and open interest so far is minimal - barely 400 contracts - but that will surely rise in the coming months. The CME Group launched its bitcoin future on Dec. 17 with the contract opening at what is currently its session high and dropping over 6% within the first half hour.
The CME bitcoin front-month futures opened at $20,650 and have so far traded as low as $19,290 and as high as $20,650 in a session that extends into Monday.
The new contract was recently at $19,290 on CME, below the $19,500 reference price set by the exchange for the January contract. The reference price, from which price limits are set, is $19,600 for the February contract, $19,700 for March and $19,900 for June, according to CME.
The week-old bitcoin futures contract at the Cboe was last trading at $19,280, up 6.5% on the day.
The advisor on macroeconomics to the CEO of the 'Opening-Broker' brokerage house, economist Sergey Hestanov, speaking with Vestnik Kavkaza, in the first place noted that the beginning of bitcoin futures trading at the world's largest stock exchange will not affect the market of cryptocurrencies.
"There is no connection between the reliability and the availability of futures trading .It's completely different things, but usually when such events occur, popularity increases for at least some time. So the trade turnover is likely to increase somewhat. Maybe even prices," the expert said.
He also stressed that it is not worthwhile to expect other cryptocurrencies to be traded at world markets. "A significant proportion of regulators all over the world are very wary of cryptocurrencies. Among large countries, perhaps only the US and Japan are loyal to them," the advisor on macroeconomics to the CEO of the 'Opening-Broker' brokerage house explained.
According to him, there will be no bitcoin futures trading at the Moscow Interbank Currency Exchange in the short term as well. "It will take a lot of time to allow the organized trading of cryptocurrencies in Russia," the expert believes.
In addition, he drew attention to the fact that today there are no ways to legitimately protect the interests of traders in cryptocurrencies. "It is important to understand that in addition to price fluctuations, the peculiarity of the cryptocurrency is that if they are stolen, it is impossible to make your case in an ordinary court," Sergey Hestanov summed up.
The professor at the department of the stock market and investments at the Higher School of Economics, Alexander Abramov, in turn, stressed that it is yet difficult to predict how this event will affect the market of cryptocurrencies. "Theoretically, the start of futures trading may help make the market more transparent. As far as I understand, the start of trading led to a decrease in the market value of bitcoins, which in principle is a good signal that futures markets make the cryptocurrency market more understandable. But in the bad situation the futures market can spur speculative operations with bitcoins," the expert said.
At the same time, he pointed out that the appearance of other cryptocurrencies at the auctions on world stock exchanges should not be expected in the foreseeable future. "Now everyone will monitor this situation," the professor at the department of the stock market and investments at the Higher School of Economics said.
He also expressed the hope that the Moscow Exchange will wait to start bitcoin futures trading. "As far as I understand, the Central Bank is also conservative about it: there are few domestic institutional investors in the Russian market who can rationally assess the situation. So it seems to me that Russia will have a conservative approach to cryptocurrency futures," Abramov said.
In addition, he stressed that bitcoin futures trading risky enough.
