Crypto markets have been in free fall for most of the week as a result of panic selling on the back of news of further crackdowns in Asia. There could be a number of other catalysts for the declines, including the expiration of the first Bitcoin futures contracts.
Launched last month amid some technical problems, the first CBOE Bitcoin XBT contracts have just expired with a settlement price of $10,900, according to reports determined by the 4:00pm ET Gemini Exchange Bitcoin auction. CNBC reports a settlement price slightly higher at $11,055 for the XBT F8 contract. The price of BTC at the time of launch on December 10th surged from $13,400 to over $15,000 in a day.
Shorting Wins
Over 124,000 contracts were traded across expiries, representing a notional value of over $1.5 billion. The cash-settled contracts were designed to allow investors to bet on whether the price of Bitcoin would be higher or lower than the opening price, and as it turns out, those that shorted it came out on top.
Chairman and CEO of CBOE Global Markets, Ed Tilly, hailed the settlement as a success:
Our regulated market experienced a smooth operational close and the settlement process worked as designed. This is an encouraging initial milestone, and we look forward to working with customers to power the growth of this nascent market.
Coincidental or not, the price of Bitcoin started heading back up just after the expiration and is currently trading at $11,100. This is after hitting a low of $9,600, where it has not been since the end of November.
Further Products
According to the CBOE product website, the exchange’s G8 two month contract is trading at $11,170 at the time of writing. Further reports suggest that there could be more Bitcoin and crypto-related products in the pipeline. If regulators come on board, an ETF could also be offered in the near future. Ed Tilly went on to state:
Before you get into mainstream [exchange-traded products], we need to get through a series of settlements before that makes sense to regulators. Those boxes have to be checked before theres’ a mass roll-out of exchange-traded products.
Recent market drops could be an annual cycle which have other influences, such as major holidays in Asia, regional clampdowns, or the approaching end of the tax year. The full impact of these first contracts on the crypto markets as a whole will become clearer in time.
Will further futures contracts have a major effect on crypto markets? Let us know your thoughts in the comments below.
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