Get ready for some extreme volatility, even by Bitcoin's standards.
In less than 5 hours, we are going to see Bitcoin futures products introduced for the first time.
The CBOE will be the first to introduce such products and even they say that they expect things to be volatile at first as they have hiked margin requirements to a minimum of 40%, which is much higher than just about any other asset.
Interactive Brokers will have a minimum of 50% margin requirements and won't allow people to take short positions initially.
The futures contracts will be cash-settled based on the auction price of bitcoin in dollars on the Gemini exchange, owned and operated by the Winklevoss twins.
You may have heard of them, those bitcoin billionaires that were on the "losing" end of that whole Facebook debacle...
Will this make bitcoin go up or down?
That is the question on everyone's mind.
On the one hand these products will open bitcoin to many more investors than ever before, specifically the institutional kind. Allowing them to be involved in bitcoin without actually having to create a digital currency account.
On the other hand, it will allow people to take short positions in bitcoin in a much larger way than ever before.
Over the long run, allowing shorting in a meaningful way as well as getting large institutions involved will ultimately help with price discovery and with reducing volatility.
It is just not clear at what price point that might be. It could be $10, $1000, $10,000, $100,000+ or any number in between.
However, in the short term, it is not clear exactly what will happen.
Judging by the volatility in the last 12 hours of trading already, we might have an idea of what is to come...
Bitcoin hit $12,500 and $15,500 all within a couple hours of each other.
Get your popcorn ready ladies and gentleman, things are about to change in a very meaningful way in less than 5 hours.
Stay informed my friends.
Image Source:
https://pixabay.com/en/rocket-red-orange-fireworks-461750/
