CBOE exchange website down minutes after releasing Bitcoin futures (opens in new tab)

Loving the throwaway handle

This comment is the exact reason why I cringe when anyone mentions anything related to trading.

Notice, he/she did not link anything related to how the future contract works?

How can you trade something you do not understand?

I would be fired the first day if I couldn't explain to my boss how the instrument/contract was constructed.

How do you think quants model? First they understand how the contract works

If they mess the basics up, then "Houston , we have a problem."

> That seems to be an ultimate insult and revenge of the finance industry toward the original idea behind bitcoin.

I don't think you need to pass any sort moral judgement about the existence of this. Cash-settled futures exist for almost all traded commodities (oil, gold, pork bellies at one point...)

I thought the original idea of Bitcoin was to be a currency and make fiat money obsolete. The finance industry is simply acknowledging that it’s a speculative asset and mostly interesting for its volatility, something that fits well within its longstanding frameworks.

It's for hedging exposure to reduce uncertainty. Futures markets historically reduce volatility and allow hedgers to plan ahead in their businesses. Speculators are there to provide liquidity and aid in price discovery. Yes, lots of caveats, but generally it seems to work. While initial bouts of increased volatility have sometimes come just before ("pre-hedging") and after the introduction of futures, their effect after an initial period has been to markedly reduce volatility. I can't see how BTC could survive without futures, tbh, though I'm actually a pessimist who thinks the blockchain will find other uses.

OK, think of bitcoin as a means of exchange. Thing is, it's so volatile and potentially slow that who knows what value you're going to actually get on the other side of a transaction. You transfer one BTC but by the time it arrives at the other side it could be worth $2,000 less, so you're in the hole $2,000? Good grief. Likewise if you accept payment in BTC, you must wait for it to arrive. In an active, healthy futures market, you can dip in and out with extreme speed and ease

Futures allow me to hedge transaction, mining and other uncertain time (assuming the futures contracts are actually popular) by hedging. However, because the few people who actually use BTC for something other than speculation probably don't typically send and receive whole bitcoins, or in the CME futures case, five BTC at a time, the futures markets might in fact be useful for... intermediaries?

Anyway, BTC is even too wild a ride for futures! Clearing houses (who accept responsibility if losing traders go broke and can't pay what they owe) aren't all so eager to jump in, because, you know, danger. Also, futures markets have price limits that act like circuit breakers to calm things down when the trading gets too insane -- "limit up" and "limit down" -- when trading is halted, and you can neither buy nor sell. This is a dangerous time, and if you've traded on these markets you'll know that you can feel like you're going to have a heart attack when the market is flying dramatically, suddenly trading stops, and you have no idea at what price it will reopen. But BTC has been reaching this kind of limit range with increasing frequency.

The various exchanges are constantly trying out new products, and most of them never catch on. So, who knows about BTC.

Anyway, if you don't think that Bitcoin should be connected to the rest of the world, including the financial world, then why use them?

I said long ago that banks can issue derivatives on top of bitcoin. And we are right back to where we began.

It's just the website. Per twitter, "All trading systems are operating normally."

I'm honestly surprised that there aren't more crypto financial instruments that are implemented/valued in other cryptos.

Eth is totally fubar right now due to cryptokitties

The trading that happens on exchanges is done off-chain.

The bid is the highest price of all open buy orders. If you're selling, this is the maximum price you can make a sell order for and have your order instantly filled.

The ask is the lowest price of all open sell orders. If you're buying, this is the minimum price you can make a buy order for and have your order instantly filled.

You "lift the ask"(what you as a buyer are able to buy at), and "hit/slam the bid"( what you as a seller can sell at)

Bid is latest buy order. Ask/Offer is latest sell order.

Many exchanges have the “maker-taker” model. If you add liquidity to the order book, you are paid by the Exchange. If you take liquidity away from the order book, you pay the Exchange.

Not sure whether it's the same site but the site which hosts current prices is unresponsive: http://cfe.cboe.com/cfe-products/xbt-cboe-bitcoin-futures

Trading just started and CBOE is not nearly as big and as active as CME.

Also, trading volume for futures in general is pretty low. You're rarely going to see volume above 100k a Sunday night. Coffee futures have around 23k volume right now.

Currently, volume is over 2k. On a Sunday night. That is over 30 million worth of Bitcoins. Volume will probably skyrocket come Monday when the markets are open.

It's a sad day for Bitcoin market makers though. Previously there weren't many major players.

All indications were that volume and liquidity would be low initially. Give it a month to settle.

The CBOE website is separate from the trading system. Futures in the US are regulated by the CFTC. There is no reason to believe that this is manipulation. As others have mentioned, it is likely that their website is simply getting hugged by the Internet due to the new contract.

Trading is unaffected. You can see quotes at any brokerage that allows trading futures, though you may need a paid subscription for access to non-delayed quote data. Look for the symbol XBTF18.

I wouldn't be surprised if this was a DDoS attack, as all bitcoin exchanges have suffered from them, but I don't know what they think they're accomplishing because unlike bitcoin exchanges the CBOE website is completely separate from the trading systems.

(Not a trading whiz.) Is there anything in this strategy that would prevent any other trader from piggybacking on the swings and making money? I could it see it working the first month but I think a lot of other traders (perhaps with better trading equipment - think HFT) would be prepared and could split the available profit in subsequent months.

I think the consensus in the bitcoin community is that it won't have any effect and Bitcoin will continue chugging along as it has.

It was mainly the bears saying the futures would increase shorts on bitcoin.

Can't imagine anyone in their right mind would short bitcoin right now though...