The first bitcoin futures contracts are now up and running on the CBOE. The excitement was everything we expected and more. Overall, $40 Million worth of volume was added by Wall Street, which comes out to about 0.3% of yesterday’s total volume. A slow but significant start. The lack of short sellers emboldened the entire crypto-market causing prices of bitcoin and many other tokens to skyrocket towards their all time highs.
CBOE’s circuit breakers that are designed to halt trading should the price swing too wildly kicked in… twice.
In addition, the CBOE’s website experienced a remarkable surge in visitors causing the website to crash several times and delayed service, though the trading mechanisms held up well.
Welcome to the party. You’ve got a lot of catching up to do.
The US Jobs report comfortably beat expectations on Friday causing the stock markets to rise nicely. The momentum seems to have carried through the weekend with Asian markets up this morning and futures pointing to a positive open in Europe.
In addition, the Federal Reserve is expected to raise their interest rates this Wednesday and a fresh round of stimulus from the People’s Bank of China may be on the cards shortly after.
Thursday will be a huge day for Forex traders as we get interest rate announcements from the Swiss National Bank, the Bank of England, and the European Central Bank.
Though the Fed is gradually tightening their belt, money around the world is still cheap and easy, which is why many stock indices are breaking new record highs.
Trouble on the Border
The ground-breaking deal that was reached between the UK and the EU last week hinged heavily on the deal that the UK reached with their neighbors in Ireland. The idea is that the border between Ireland and Northern Ireland will not revert to a hard border.
Meaning, that the UK will need to keep the flow of goods and services into North Ireland following the regulations dictated by the EU. However, over the weekend we saw some controversy as the UK government tried to backpedal a bit on this deal saying that it was contingent on the upcoming negotiations with the EU.
The Irish were notably miffed as they understood these negotiations to be final and we’re now back at a point of contention.
The GBPUSD is once again testing the rising support level that it has been building since early November. So much rests on a comprehensive and favorable deal to be struck.
Crypto Gone Wild
In the old markets, we used to say “buy the rumor sell the news.” In what is being called the new normal we say “buy the rumor buy the news.”
In crypto, we just say “buy everything as much as you can.”
Though this market is extremely risky, investors in this space don’t even seem to notice. With the introduction of Bitcoin futures on Wall Street came a strong and powerful rally across the crypto-world. Out of the top 100 biggest cryptocurrencies, 94 of them are in the green today.
Revision: In Friday’s update we mentioned that there is a chance that the price of the CBOE futures may become disconnected from the rest of the market. A few readers have pointed out that this is not correct.
The CBOE’s XBT futures are actually fixed to the price traded at Gemini.com and are settled in cash daily. The CME Group’s contracts will be a bit more advanced and the price will be set by an index that is derived from several exchange sites.
Regardless of the excitement in the market, we must remember that Wall Street has only so far dipped their toes in the water and it may take a month or two to really understand how much they will be able to impact the prices around the world.
The good news is that the bitcoin miners have been working hard over the weekend and managed to reduce the backlog of unconfirmed transactions. The mempool is back under 100,000. 🙂
Keep a close eye on the all time highs of your favorite coin. If we start seeing any breakouts, there’s no telling how high we might go.
Have an amazing week ahead!