Bitcoin futures make firm debut on launch day: Fed expected to raise rates this week
GETTY / STOCK Bitcoin futures launched strongly on US exchanges in New York and Chicago
The most-traded contract on the Chicago-based CBOE Global Markets exchange opened at $15,460 in New York on Sunday evening, before leaping to a high of $18,700 - a gain of 21 percent. They were last quoted at $18,100 a premium of more than $1,700 to the price on Gemini Exchange. The futures are cash-settled contracts based on the auction price of bitcoin in US dollars on the Gemini Exchange, which is owned and operated by virtual currency entrepreneurs Cameron and Tyler Winklevoss. The cryptocurrency has boasted a gravity-defying 15-fold gain since the start of the year, attracting institutional interest and no small amount of question marks.
GETTY There is no sign of the Bitcoin bubble bursting yet
The acting governor of the Reserve Bank of New Zealand yesterday said bitcoin appeared to be a "classic case" of a bubble. "With a bubble you never know how far it is going to go before it comes around," Grant Spencer told a local television programme. Some market participants believe the fallout across other financial assets from a potential bursting of the bubble will be limited. "Bitcoin's market capitalisation is currently around $240 billion, which is much smaller, say, than the value of gold outstanding," said Andrew Kenningham, economist at Capital Economics. "If the price of bitcoin fell to zero today, the paper losses would be equivalent to a 0.6 percent fall in US equity prices. As most investors have bought bitcoin at much lower prices, the relevant losses would arguably be smaller."
GETTY Bitcoin's value has grown 15-fold so far in 2017
With a bubble you never know how far it is going to go before it comes around. Grant Spencer
Asian shares were buoyant with every single market but one in the black, following strong U.S payrolls data and better-than-expected Chinese trade figures on Friday. Spreadbetters pointed to a strong opening for European shares, while US stock futures indicated a firm start for the S&P 500 which is seen up 0.1 percent. The MSCI's broadest index of Asia-Pacific shares outside Japan added 0.5 percent to 552.38, well above a recent two-month trough of 542.27 points. Japan's Nikkei climbed 0.6 percent while Chinese shares rallied, with the blue-chip CSI 300 index up 1.3 percent. Vietnam was the only Asian index in the red. Currency market investors were cautious ahead of a big week for policy meetings globally, with the Federal Reserve the only major central bank expected to raise interest rates. The Bank of England and the European Central Bank are likely to hold rates steady.