It's "resources needed for today's Bitcoin Futures Launch on CBOE", not "resources needed to understand how future contracts work".
While those would certainly be good as well, they assume that you know what's going on in the first place. It's not like we need to post a primer on JS and node ever time a new npm package is posted.
> What I Learned Losing A Million Dollars, the protagonist makes a big discovery. He remarks that a fellow called Joe Siegel, the most active trader in a commodity called “green lumber” actually thought that it was lumber painted green (rather than freshly cut lumber, called green because it had not been dried). And he made a living, even a fortune trading the stuff! Meanwhile the narrator was into theories of what caused the price of commodities to move and went bust.
Ok, so these bitcoin futures let people bet on the future bitcoin price without actually owning any bitcoins, without having any actual stake in the actual market. (these futures are settled in cash, so nobody ever has to deliver any actual bitcoins)
That seems to be an ultimate insult and revenge of the finance industry toward the original idea behind bitcoin.
I am again amazed how the finance industry gets to have their own tax-free casinos (where they play the game of I win / You loose with other peoples money) while ordinary gambling addicts have all kinds of rules to play by and taxes to pay when they need a fix for their habit.
That said, I also fail to see why any sane person would want to play this specific bitcoin futures casino. Even at current market cap, the bitcoin price seems to be easily manipulated by a few "bitcoin whales", so it would seem the odds are stacked heavily against these new wannabee bitcoin investors. It seems like a new way to make even more money for big bitcoin traders.
> That seems to be an ultimate insult and revenge of the finance industry toward the original idea behind bitcoin.
I don't think you need to pass any sort moral judgement about the existence of this. Cash-settled futures exist for almost all traded commodities (oil, gold, pork bellies at one point...)
Not my moral judgement, I think the creator of bitcoin was quite explicit in his (or her) disapproval of the finance industry and governments inflating the economy by injecting large amounts of money, and went on to create a currency with a fixed supply. It is ironic these futures are effectively leveraged bitcoins, needing central trust. I'm pretty sure Satoshi would not approve.
That said, I do question the value of cash settled pork belly futures when you are not going to buy or sell any actual pork belly in the future. If I were to write tax law, I'd tax it the equivalent of casino tax, at least.
It’s one thing to say that Satoshi would not approve. That’s likely true. It’s another thing altogether to say that Satoshi would be surprised by this, or that it is in any way ironic.
Well Satoshi also created a currency which is completely usuited for the task due to it's limited supply as well as a host of external issues. So... meh?
Finance is pragmatic. Lots of dumb money is chasing Bitcoin. Philosophical leanings of early backers, who relinquished control by nature of the network’s design, are irrelevant.
I thought the original idea of Bitcoin was to be a currency and make fiat money obsolete. The finance industry is simply acknowledging that it’s a speculative asset and mostly interesting for its volatility, something that fits well within its longstanding frameworks.
It's for hedging exposure to reduce uncertainty. Futures markets historically reduce volatility and allow hedgers to plan ahead in their businesses. Speculators are there to provide liquidity and aid in price discovery. Yes, lots of caveats, but generally it seems to work. While initial bouts of increased volatility have sometimes come just before ("pre-hedging") and after the introduction of futures, their effect after an initial period has been to markedly reduce volatility. I can't see how BTC could survive without futures, tbh, though I'm actually a pessimist who thinks the blockchain will find other uses.
OK, think of bitcoin as a means of exchange. Thing is, it's so volatile and potentially slow that who knows what value you're going to actually get on the other side of a transaction. You transfer one BTC but by the time it arrives at the other side it could be worth $2,000 less, so you're in the hole $2,000? Good grief. Likewise if you accept payment in BTC, you must wait for it to arrive. In an active, healthy futures market, you can dip in and out with extreme speed and ease
Futures allow me to hedge transaction, mining and other uncertain time (assuming the futures contracts are actually popular) by hedging. However, because the few people who actually use BTC for something other than speculation probably don't typically send and receive whole bitcoins, or in the CME futures case, five BTC at a time, the futures markets might in fact be useful for... intermediaries?
Anyway, BTC is even too wild a ride for futures! Clearing houses (who accept responsibility if losing traders go broke and can't pay what they owe) aren't all so eager to jump in, because, you know, danger. Also, futures markets have price limits that act like circuit breakers to calm things down when the trading gets too insane -- "limit up" and "limit down" -- when trading is halted, and you can neither buy nor sell. This is a dangerous time, and if you've traded on these markets you'll know that you can feel like you're going to have a heart attack when the market is flying dramatically, suddenly trading stops, and you have no idea at what price it will reopen. But BTC has been reaching this kind of limit range with increasing frequency.
The various exchanges are constantly trying out new products, and most of them never catch on. So, who knows about BTC.
Anyway, if you don't think that Bitcoin should be connected to the rest of the world, including the financial world, then why use them?
And here I thought it was Bitcoin that had scaling issues. Someone should make a futures market for Bitcoin on the Ethereum block chain settled in ETH just for irony.
The problem is they are heavily correlated in downward movement. They all crash together. So you cant effectively short BTC in ETH because even if you win, you lose.
The bid is the highest price of all open buy orders. If you're selling, this is the maximum price you can make a sell order for and have your order instantly filled.
The ask is the lowest price of all open sell orders. If you're buying, this is the minimum price you can make a buy order for and have your order instantly filled.
Bid is latest buy order.
Ask/Offer is latest sell order.
Many exchanges have the “maker-taker” model. If you add liquidity to the order book, you are paid by the Exchange. If you take liquidity away from the order book, you pay the Exchange.
Trading just started and CBOE is not nearly as big and as active as CME.
Also, trading volume for futures in general is pretty low. You're rarely going to see volume above 100k a Sunday night. Coffee futures have around 23k volume right now.
I’m well aware, it was meant as a data point for anyone not aware who could possibly think for a second their public website going down has anything to do with demand :)
Currently, volume is over 2k. On a Sunday night. That is over 30 million worth of Bitcoins. Volume will probably skyrocket come Monday when the markets are open.
It's a sad day for Bitcoin market makers though. Previously there weren't many major players.
I wonder if they are getting DDOS'ed. Many crypto exchanges do get DDOS'ed before a big move. It is the nature of the beast since these market are not regulated and the "elite" guys operating on it think this is how free markets work (whoever has the most toys win).
The CBOE website is separate from the trading system. Futures in the US are regulated by the CFTC. There is no reason to believe that this is manipulation. As others have mentioned, it is likely that their website is simply getting hugged by the Internet due to the new contract.
Trading is unaffected. You can see quotes at any brokerage that allows trading futures, though you may need a paid subscription for access to non-delayed quote data. Look for the symbol XBTF18.
I wouldn't be surprised if this was a DDoS attack, as all bitcoin exchanges have suffered from them, but I don't know what they think they're accomplishing because unlike bitcoin exchanges the CBOE website is completely separate from the trading systems.
So what keeps one of the so-called "whales" with massive balances from buying a huge amount of put orders and then tanking the market with a huge afterhours sell just before the execution date?
Buy the coins back at the depressed price, and you could do this every month like clockwork.
(Not a trading whiz.)
Is there anything in this strategy that would prevent any other trader from piggybacking on the swings and making money? I could it see it working the first month but I think a lot of other traders (perhaps with better trading equipment - think HFT) would be prepared and could split the available profit in subsequent months.
I think all the bitcoin fans making this out to be a big deal is kind of funny. The volume of futures exchanges shits on any of the fly-by-night bitcoin exchanges. Professional traders don’t google CBOE to look at marketing material, lol.
Futures were initially invented for hedging: imagine you own 1000 BTC and for any reason (liquidating, etc.) you don't want to make any P&L (profit and loss) on these => you sell futures contracts for 1000 BTC. What you gain on one side you lose on the other, so your P&L will be 0 (minus fees, you can think of these as a sort of insurance).
This is useful for instance for a fund that needs to neutralize its positions while closing them over a span of several days/weeks. If you expect a future payment in BTC and don't want to expose yourself to the risk that Bitcoin will crash: you short the equivalent amount in futures.
Because futures contracts are (usually) much more liquid that actual assets, they are very useful to short whenever you have the actual asset in your books and don't want to expose yourself to the risk of it losing value.
Not sure if I'm explaining all this very clearly...
One can simultaneously believe something is neither worth buying nor shorting. In this case, Bitcoin’s volatility and meteoric rise make predicting the timing of its crash risky.
That doesn't mean you should short it. Bitcoin is casually up 6% today, in recent history it has had daily gains in excess of 20%. It can rise by multiple percent in a few minutes.
You would have to be completely nuts to short it, regardless of what you think it is going to do in the medium-term.
CBOE Chart Updates: http://www.cboe.com/delayedquote/advanced-charts?ticker=XBT%...
CBOE XBT - Bitcoin (USD) Futures Table: http://www.cboe.com/delayedquote/futures-quotes
Cryptonaire live forecast updates: https://cryptonaire.com
Bloomberg Live Coverage: https://www.bloomberg.com/live/us
CMC for BTC indexing including non-US pairs: https://coinmarketcap.com/currencies/bitcoin/#markets
WCI for BTC indexing only US pairs: https://www.worldcoinindex.com/coin/bitcoin