Trading in the newly opened bitcoin futures market had to be halted twice to try and dampen volatility as prices surged by more than 25% in the first sesion of trading.
Although market makers still have serious concerns about how the contracts will work in practice, investors seemed unperturbed, pushing January 2018 contract prices up from $15,000 to $18,740.
This compares to a current spot US dollar exchange value of $16,753.
The futures opened on the Chicago Board Options Exchange (CBOE) last night, with the CBOE saying it will offer fee free trading through December to encourage volume.
Rival CME is to offer futures contracts on the cryptocurrency from next week.
Trade body the Futures Industry Association (FIA), which represents global clearing houses, is sceptical of the development, however, issuing a warning about the lack of historic date and modelling potential around alternative currencies.
He also bemoaned the lack of consultation and flagged that bitcoin’s paper value has risen by over 1,000% this year.
In an open letter, FIA CEO and president Walt Lukken said: ‘A more thorough and considered process would have allowed for a robust public discussion among clearing member firms, exchanges and clearinghouses to ascertain the correct margin levels, trading limits, stress testing and related guarantee fund protections and other procedures needed in the event of excessive price movements.
'The recent volatility in these markets has underscored the importance of setting these levels and processes appropriately and conservatively.
‘We remain apprehensive with the lack of transparency and regulation of the underlying reference products on which these futures contracts are based and whether exchanges have the proper oversight to ensure the reference products are not susceptible to manipulation, fraud, and operational risk.’
Reflecting the concerns about the weight of hot money being pumped into crypto though, Brian Armstrong, the CEO of Coinbase, one of the biggest altcoin exchanges, wrote in the company’s blog at the weekend:
‘The last few weeks has seen an unprecedented increase in the price of digital currencies. More people are engaging with our platform than ever and that bodes well for the future of the digital currency. At the same time, it does create extreme volatility and stress on our systems. We take this very seriously and wanted to share some important thoughts.
‘Despite the sizable and ongoing increases in our technical infrastructure and engineering staff, we wanted to remind customers that access to Coinbase services may become degraded or unavailable during times of significant volatility or volume. This could result in the inability to buy or sell for periods of time.’