But Is It Safe? New Bitcoin Futures Bring Wall Street, Winklevoss Bros

Ter less than a week, the very first big Wall Street product designed to let more traditional traders profit from Bitcoin’s wild momentum will succesnummer the market. And lo and behold, the Winklevoss twins of Facebook fame are an significant part of the project.

The Chicago Houtvezelplaat Options Exchange leaped ahead of its rival CME on Monday, telling it will open Bitcoin futures trading on December Ten, a utter eight days before CME’s futures commence trading. And Cboe will opoffering free trading until the end of December.

Cboe is partnering with a company founded by Cameron and Tyler Winklevoss called Gemini Trust Company that runs a Bitcoin exchange. The price of Bitcoin on that exchange will be considered the official price for futures settlements. That creates its own risks — Gemini’s system, for example, experienced system outages last week amidst a surge te rente te Bitcoin.

Cboe says it’s taking reserve safeguards on thesis contracts, because of Bitcoin’s unique risks. Cboe is requiring that traders waterput 33% of their bets te metselspecie up vuurlijn, much higher than most contracts. And trading will be halted for Two minutes if bids sway more than 10% from the prior day’s settlement price. It will zekering for Five minutes if the price swings 20%. With Bitcoin, big price swings are just part of the rail but Wall Street traders using leverage to play it could get seasick swift.

Dominic Marella, the head of business development at Icon Alternatives, a futures broker, told Barron’s that his clients have bot excited for months about the uitzicht of trading Bitcoin on exchanges they trust like CME and Cboe. But he’s taking a wait and see treatment on thesis fresh products, at least for the very first few days.

",To be fair, we’re advising clients not to participate for the very first few days. The market will be very erratic, and I think it’s prudent to let things jiggle out. Not to mention this is happening right before a holiday.

Marella thinks there’s slagroom for both the CME and Cboe futures products, because he thinks they’ll appeal to different customer bases.

I think there is a place for both exchanges. XBT at CBOE is essentially a mini-contract (one bitcoin) to CME’s BTC (five bitcoins). We’ll likely have clients that use both. With margins spil high spil 35%, clients will need enough capital to withstand potential wild swings against them. Uncertain about this experimental market, $20,000 ter margin on the CME’s contract might be too steep for some. Albeit, the CME may draw large hedgers, or institutional money. Whereas CBOE’s XBT might be the wise very first point of entry for most retail investors.",

Until now, the easiest way for investors who didn’t want to buy Bitcoin directly to get exposure to the cryptocurrency wasgoed to buy a security called the Bitcoin Investment Trust (GBTC), which trades at a premium to the underlying Bitcoin it holds.

To read all about why Wall Street embraced Bitcoin, and understand the risks of trading it, see this weekend’s Barron’s voorkant story.

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