Trading of the Chicago bitcoin futures commenced at 5pm CET on Sunday, or Midnight European time. Almost all the action was in the January future.
Trading in the first few minutes was volatile with a sharp spike of around $1000 followed by a sudden plunge of around $600.
After trading at a low of $15’420 the price started to climb. Professionals and amateurs alike saw an opportunity as the price seemed to stabilise at around $1000 above the Gemini spot price. They accordingly took out short positions to profit from the arbitrage.
This strategy seemed to backfire as the January futures price resumed it ascent. 5 hours after trading commence the premium above spot had climbed to over 10% with the January future at $18’400 compared to the Gemini spot of $16’700. As the price rose some traders bought back their short position driving the price higher to a peak of $18’700. The price has since fallen back to $18’200, compred to the Gemini spot price of $16’600, which means the future isvaround 10% higher than the spot.
Volume was light compared to the crypto exchanges and compared to other CBOE futures products. After 5 hours and 15 minutes 2081 contracts representing 2081 bitcoin had been traded. In comparison Gemini reported volume 14’500 bitcoin and Bitfinex reported volume of 100’000 bitcoin.
Does this premium above spot mean that the bitcoin price will be driven higher? Probably not on its own. The futures are cash settled and nobody needs to buy bitcoin to settle. However there is a psycological effect. If the futures traded at a premium to spot then it shows a lot of latent demand, which will, over time, translate into actual bitcoin purchases. However the future price should fall towards the spot price bearing in mind, spot is where the real action is.
After 5 hours and 15 minutes of trading, the January futures were trading at $18’530, up over $3000.
Here’s the chart.