In Chicago, a financial product can now bet on the evolution of the controversial virtual currency.
Bitcoin, the controversial mother of virtual currencies, made a booming start on Sunday at the Chicago World Stock Exchange, surpassing $18,000 per unit in its quest for popular recognition.
Around 5 p. m. (midnight in Paris), one of the first financial products to bet on the evolution and future of the virtual currency was offered at a price of $15,000. It has been designated under the stock symbol "XBT" by the Chicago Board Options Exchange (CBOE), one of the two U. S. futures exchange platforms.
The starting price was based on the price of the bitcoin in force on the Gemini specialized exchange, founded in 2015 by brothers Tyler and Cameron Winklevoss, made famous by the movie "The Social Network" on the history of Facebook.
"Quite calm" and "stable"
This resulted in high volatility and heavy traffic that made the CBOE website inaccessible in the first twenty minutes. The stock exchange operator has assured that trading was not affected and will close Monday around 10:15 p. m. (in Paris) for this first session.
At around 4:20 a. m. (in Paris), the bitcoin took off at 17,750 dollars and thus exceeded the highest crossed on alternative platforms on the Internet unregulated. It even went up Sunday to $18,010. It's "pretty quiet" and "stable," said Bob Fitzsimmons, head of futures trading at Wedbush Securities.
At the same time, about 1694 contracts had changed hands, according to the CBOE, which indicated that "the exchanges went according to plan".
Compete with gold?
The proposed financial instruments are the first official opportunity for professional investors to invest in bitcoin, launched in 2009, which they are wary of due to its lack of regulation and transparency.
The CBOE gives the bitcoin "legitimacy because it recognizes that bitcoin is an asset like any other (dollar, euro, oil, gas, soybeans, NDLR) that can be traded", adds Nick Colas, expert at Data Trek Research. Wall Street's recognition is a first step in the bitcoin's stated ambition to become an asset as popular as gold among the general public.
Its advocates plan to move up a gear by asking the SEC, the gendarme of the American stock exchange, to authorise the creation of an ETF in bitcoin, a kind of financial investment or financial savings in which Madame et Monsieur Tout-Le-Monde will be able to invest their savings. The SEC has so far refused to grant such a request, explaining that there is a lack of transparency in the pricing of bitcoin and that it can be easily manipulated.
Guardrails
The first exchanges on a financial market that is well established should ease fears of a bubble and eventually bring stability to the virtual currency, hope professional traders.
The CBOE states that it has put safeguards in place to avoid wild fluctuations: for example, it will suspend trade for two minutes if product prices suddenly rise or fall by 10%. The stop will be five minutes if the upward or downward movements reach 20%.
Despite these assurances, many experts warn of possible manipulation of the exchanges." We remain concerned about the lack of transparency and regulation of "bitcoin" and "we ask whether exchanges will be properly controlled to ensure that the (bitcoin) is not subject to manipulation and fraud," wrote the FIA, an association of major banks that acts as an interface between investors in the futures market.
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