More futures: Bitcoin was fixed above $ 8,000
In the evening on Sunday, Bitcoin tested a new historical maximum, having fixed above $ 8,000. At the Bitfinex exchange, the exchange rate was a record $ 8,130, Bitstamp and GDAX did not get much to the $ 8,100 mark. In addition, although the difference with the previous maximum was insignificant, it sets up certain positive thoughts. It seems that the news that LedgerX, the operator of the currency exchange, launched the first long-term Bitcoin futures option, forced the crypto currency to go again after the consolidation, which lasted several days.
The contract was established on Saturday morning and expires on December 28, 2018. According to his terms, the buyer can buy Bitcoin for $ 10,000, that is, almost 20% above the current rate.Despite the fact that the buyer of such futures takes advantage only if the rate rises above $ 10,000 (the exercise price of the option), the appearance of such investment instruments speaks of the market's confidence that the Bitcoin rate will reach these levels within the specified period.There is also an opinion that the appearance of such financial instruments in the field of cryptocurrency will become one of the signs of the market's growing and this will attract more money from the traditional finance sector.
On Friday, immediately after the trading option was placed on LedgerX, two investors appeared who were interested in it. If the Bitcoin rate does not rise to the indicated amount, then the buyer agrees to pay the organizer of the auction an amount of 2250.25 dollars. In the event that Bitcoin overcomes the $ 10,000 mark, the buyer will be able to get Bitcoin at the strike price of the option or refuse to purchase the cryptocurrency.
In an exclusive interview with CoinDesk, LedgerX CEO Paul Chou sought to position the milestone as just the first of many more before the cryptocurrency market can truly be considered mature.
"There will be, I expect, a lot more trades down the line. This is the first one, but it at least gives you the first guess from different institutional traders as to what bitcoin's dynamics will look like from now until 2018."by Author
The trade option was listed by LedgerX late Friday night, and to Chou's surprise, two institutional investors agreed to the terms of the deal just one day later.
Under the terms, the buyer agreed to a price of $2,250.25 for the trade, meaning the seller collects that money if the price is less that $10,000 by the end of next year, and the buyer gets to purchase Bitcoin at the strike price if it is higher.
Unlike a futures swap however, the buyer is not obliged to purchase the asset.
"If the price goes to zero, you don't have to pay $10,000 for it," Chou said. "But if a year from now it's at $20,000, then you can exercise your options."
Based on LedgerX's own calculations (made using the Nobel-prize winning Black-Scholes financial markets model), the startup believes there is a 25 percent chance that Bitcoin will reach that level in the allotted time.
While this is the first LEAPS financial instrument matched by New York-based LedgerX, they have been conducting increasingly high trade volumes since their soft launch a month ago.
As reported by CoinDesk, LedgerX traded $1 million in bitcoin derivatives its first week of trading, ending Oct. 20.
Since then, the first cryptocurrency firm to be granted a derivatives clearing organization (DCO) license by the CFTC has posted a $1 million day, a $1.6 million day and on November 15, a record $2.6 million day.
Since LedgerX listed the LEAPS option at 5:30 Friday evening, Chou says they saw an additional $500,000 traded before midnight. "That's for a holiday week too," he said. "So we were shocked." He estimates the company has conducted approximately $16 million in notional Bitcoin transactions to date.
While the startup's numbers seem to indicated active early interest, legacy institutions such as the Chicago Mercantile Exchange (CME Group) and the Chicago Board Options Exchange (CBOE) have both recently revealed their own similar plans.
Though Chou hopes to maintain his first-mover advantage, he said there is no hard date to launch into full operation. Rather, his team wants to make sure the platform scales well beyond the 1 million messages it sends per day before this milestone. He says he would be "surprised" if that takes "more than a month," concluding:
"But it might be sooner."by Author