Cboe bitcoin futures surge nearly 8% Friday in winning first week

Key Points
  • Cboe's bitcoin futures rise on stronger demand, notching a 17.1 percent gain in their first week of trading.
  • Trading volume already reached 1,000 contracts by Friday morning, near the full-day trading volume of the last few days.
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Cboe's bitcoin futures ended their first week of trading higher on slightly stronger demand.

The futures contract, which trades under the ticker XBT and expires in January, settled up 7.8 percent Friday at $18,105 — a 17.1 percent gain in their first week of trading.

Earlier, the futures triggered a two-minute trading halt at 5:37 a.m. ET and the contract had traded more than 1,000 contracts by 8:36 a.m., for an unofficial full-day volume of 1,515 contracts.

Full-day trading volume in the January contract had hovered closer to 1,000 and 1,500 in the last few days after nearly 4,000 contracts on the first day. Total trading volume across all three contracts was 4,127. That's still relatively small compared with futures for the Cboe's volatility index, whose daily trading volume typically ranges from the tens of thousands to more than 100,000.

The Cboe bitcoin futures have had a relatively smooth first week of trading. The futures triggered two brief trading halts Sunday night as prices surged, and triggered another temporary trading halt Wednesday as the futures fell 10 percent. The halts were in accordance with Cboe's trading rules and match similar rules for other market products.

However, investor participation remained light as firms preferred to monitor the first futures contract on an established exchange for a notoriously volatile asset. As of Thursday, major banks such as Goldman Sachs were offering limited to no support for clients to trade bitcoin futures.

Interactive Brokers and Wedbush Futures were among the roughly 20 firms that Cboe said did participate in its bitcoin futures launch. TD Ameritrade announced Friday it would give certain clients access to the Cboe bitcoin futures on Monday.

"From our point of view, the volumes at the CFE today are not reflecting the level of interest that we're seeing. There's a lot of preparation by firms to trade bitcoin one way or the other," Bob Fitzsimmons, head of Wedbush Futures, said in a phone interview Friday.

"We're seeing some digital currency hedge funds and obviously you see an element of retail in this as well, but all relatively sophisticated trading firms," he said.

Bitcoin itself was trading 6 percent higher at $17,469, according to CoinDesk. The digital currency has gained 8.8 percent for the week, 76 percent for December, and more than 1,700 percent for the year, according to CoinDesk.

The world's largest futures exchange, CME, is set to launch its own bitcoin futures contract Sunday evening. Interactive Brokers and Wedbush both plan to allow clients access, while TD Ameritrade initially will not.

Most other digital currencies fell Friday after surging in the last few days to record highs. Ethereum fell 1.7 percent to $684, Ripple, or XRP, traded more than 12.5 percent lower at 75.6 cents, and bitcoin's offshoot bitcoin cash fell 8.1 percent to $ 1,807, according to CoinMarketCap. Litecoin rose 7.4 percent to $300, the website showed.

Clarification: This story has been updated to reflect the January bitcoin futures contract traded nearly 4,000 contracts on its first day. Total trading volume across all contracts was 4,127.