Bitcoin futures soar 20% in Day 1 frenzy
NEW YORK — Wall Street got its first taste of bitcoin Monday, with the price of the first-ever futures contract for the digital currency jumping 20 percent.
It’s a step forward for bitcoin, which has soared this year despite concerns that the surge of investor interest has transformed it from a new-age currency into just the latest speculative bubble.
One prominent securities regulator warned that people were now taking out second mortgages on their homes to buy bitcoin.
The January contract for bitcoin futures closed at $18,545 on the Chicago Board Options Exchange. Trading began Sunday and the price rose as high as $18,850, according to data from the CBOE.
The CBOE’s website crashed several times or slowed down, due to a surge of interest. The exchange halted trading twice to stem volatility. The exchange operator has rules in place to stop trading after price swings of 10 percent.
The CBOE said at least 20 trading firms “actively participated” in the first day of trading, without giving specifics.
Volume of bitcoin futures was relatively low, trading less than 4,000 contracts compared with the tens of thousands that typically trade for more popular commodities like oil, gold, or wheat, or the hundreds of thousands of contracts for popular stockbased futures like the S&P 500.
The CBOE futures don’t involve actual bitcoin. They allow investors to make bets on the future direction of bitcoin. Monday’s futures price shows investors expect bitcoin to keep rising in the coming weeks, although at a slower pace than recently. The futures price was about 8 percent higher than the $17,100 quoted for bitcoin on the large private exchange CoinBase Monday afternoon.
But with the surge of interest has come concerns about the bitcoin market being in a bubble. In an interview on business network CNBC, North American Securities Administrators Association President Joseph Borg said he observed some people taking out mortgages on their homes house to buy bitcoin.
CBOE’s rival exchange CME will start trading its own futures on Dec. 18 but will use a composite of several bitcoin prices across a handful of exchanges.