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Abu Dhabi, UAEMonday 10 December 2018

Bitcoin futures to start trading on Cboe

In the run up to futures trading the market capitalization of bitcoin stood at $237 billion

The market capitalization of bitcoin has soared to $183 billion from less than $1 billion a year ago and the currency has a daily turnover of $10 billion. Brendan McDermid / Reuters
The market capitalization of bitcoin has soared to $183 billion from less than $1 billion a year ago and the currency has a daily turnover of $10 billion. Brendan McDermid / Reuters

The cryptocurrency bitcoin is set to take another step towards being mainstream tonight when futures of the currency start trading on the Cboe Futures Exchange, one of the world’s largest.

“Given the unprecedented interest in bitcoin, it’s vital we provide clients the trading tools to help them express their views and hedge their exposure.

“We are committed to encouraging fairness and liquidity in the bitcoin market,” said Ed Tilly, chairman and chief executive of Cboe Global Markets. “To promote this, we will initially offer bitcoin futures for free.”

Trading of bitcoin futures started at 5pm central time in the United States yesterday and today will be the first full trading day.

The futures are cash-settled contracts based on Gemini’s auction price for bitcoin, denominated in US dollars.

Gemeni Trust Company, founded by brothers Cameron and Tyler Winklevoss, is a digital asset exchange and

custodian.

At the time The National went to press, the market capitalisation of bitcoin stood at $237 billion, according to CoinMarketCap. That stands in stark contrast to a year ago, when it was less than $1bn.

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The currency has a daily turnover of $10bn. The total value of all cryptocurrency tokens is estimated at $388bn. according to CoinMarketCap.

“Developing a regulated derivatives market is the next logical and crucial step towards advancing the broader digital asset market,” said Tyler, chief executive officer of Gemeni.

“We have been working for years to build infrastructure to grow the digital asset market and today’s news marks a significant milestone.”

Cameron, thought to be one of the largest holders of bitcoin, told Bloomberg News that he thinks the cryptocurrency’s blazing gains this year are just the start. He predicts it will rise as much as 20-fold as investors come to view it as an upgrade to gold.

Bitcoin on Friday tumbled more than 12 per cent, falling below $15,000. It has tripled in price since October and from the beginning of the year has jumped more than 15 fold.

Its rapid rise has drawn in millions of new investors, which is boosting demand further. Its surge last week came as speculators feared missing out on what is expected to be a watershed for the cryptocurrency when futures of the cryptocurrency start trading.

While bitcoin’s meteoric rise has captured the world’s imagination, it has as many people against it as it has for it, with those dismissing its worth, including the billionaire investor Warren Buffet, saying it is a bubble waiting to burst.

Meanwhile, central banks around the world, including the central bank of the UAE, have been looking at ways to regulate the cryptocurrency.

The central bank is finishing a review of virtual currencies that may result in new regulations on the use of digital currencies like bitcoin, a person familiar with the situation said in September.

The review, among other things, is looking at ways other governments around the world have responded to the challenge of digital currencies.