Bitcoin set for a ‘regulated’ Sunday
After a wild eight years, bitcoin is trying to go straight.
Cboe, the options and derivatives exchange, is launching the first-ever regulated futures exchange for bitcoins on Sunday at 6 p.m. — but nobody knows if it will calm the controversial cryptocurrency’s notorious volatility, or spur major financial wreckage.
The instruments, which are designed to allow traders to hedge against violent price swings, come after an unprecedented week for bitcoin — at one point rising 40 percent in 40 hours, nearly reaching $20,000 on some exchanges before falling 20 percent on Friday.
The rise has been so spectacular that even JPMorgan Chase CEO Jamie Dimon, who earlier this year called bitcoin a “fraud,” has capitulated somewhat to its popularity.
“Look, everyone has a personal opinion about Bitcoin.” Dimon told CNBC. “I remain highly skeptical of it. But as I’ve said previously, I’m open-minded to uses of cryptocurrencies if properly controlled and regulated.”
Cboe’s venture into bitcoin futures marks the first time that institutions and traditional investors would be able to bet on the price of bitcoin without actually having to buy it.
CME Group is scheduled to launch its exchange on Dec. 17, and Nasdaq will start trading the futures in 2018.
The risk of trading the futures is so great that Cboe increased its margin requirement — or how much cash investors have to post to cover the risk — from 30 percent to 40 percent, spokeswoman Suzanne Cosgrove told The Post.
But while some investors heralded the Cboe launch, others are concerned that it could backfire — or even be used to manipulate the markets.
Walt Lukken, CEO of the Futures Industry Association, blasted federal regulators for approving the futures and claimed they did so in a process that wasn’t transparent and left out major institutions.
Jim Cramer, the CNBC host, said that the price of the crypto-asset would get “annihilated” once traders could use futures to bet against it.
But bitcoin’s investors aren’t backing down — and are even pre-emptively planning to launch a short squeeze to “send a message” to naysayers, according to Marc van der Chijs, managing partner at Cross Pacific Capital.