Bitcoin Short Notes Announced in Switzerland

So far, Bitcoin was a one-way game. Typically, you buy one or more tokens, and wait for the price to rise.

This strategy worked and is still working like a charm for Bitcoin owners; but it is only natural that at one point, the price of cryptocurrencies will go down. Long term, they will likely keep their growing trajectory, but every now and then – we’ll see the price of bitcoin, ether and other digital assets going up and down.

And now two banks want to equip investors with a tool to short their bets…

Mini futures made in Switzerland

Two Swiss structured products houses, Vontobel AG and Leonteq Securities AG, have recently started selling mini futures that could usher in more two-way price movement of bitcoin, potentially making the crypto market interesting to even more people (and businesses).

According to Garrick Hileman, research fellow at the University of Cambridge, the ability to go long and short paves the way for investors to take advantage of bitcoin’s significant price swings. “The lopsided cryptocurrency investment playing field, historically slanted in favor of long positions, is about to be leveled,” he said.

The certificates, which are now listed on SIX Exchange AG, come as the cryptocurrency starts to gain mainstream acceptance as a financial instrument after CME Group, the world’s largest derivatives exchange operator, said it would start bitcoin futures next month.

“The initial feedback has been extremely positive,” Manuel Dürr, head of public solutions at Leonteq, told Bloomberg. “Clients do very much appreciate the possibility of choosing between a long or a short investment in bitcoin.”

Leonteq’s product has a two-month maturity, while Vontobel’s is longer, but in both versions investors can exit early like regular exchange-traded instruments. Also both offerings are designed in such way to combine features of futures and options, and are tradable for considerably less than regular futures contracts.

Eric Blattmann, head of public distribution of financial products at Vontobel, is bullish on the product’s prospects. “We have seen big demand for our long tracker certificate from investors interested in playing the upside potential of bitcoin, and now they have also the possibility to hedge their position or go short,” he said.

CBOE and CME to offer Bitcoin futures trading

The Chicago Board Options Exchange (CBOE) and the Chicago Mercantile Exchange (CME) have released details on the upcoming Bitcoin futures trading.

CME’s website says that Bitcoin futures will come sometime before the end of the year; contracts will be 5 BTC, and spot position limits will be set at 1000 contracts. Further, the tick — which is the smallest possible price fluctuation — is set at $5 for each BTC in a contract, or $25 total.

On the other hand, CBOE contracts will be 1 BTC, and the tick will be set at $10. The CBOE will offer Bitcoin futures products under the ticker XBT.

Nasdaq to join the party in June 2018

Finally, we may see Nasdaq joining the Bitcoin futures party in June 2018, according to the Wall Street Journal. The report indicates that the stock exchange will follow the two Chicago-based markets, pending regulatory approval.

“Every research department of every regulated exchange is saying, ‘Can we do this?’ The majority of costs associated with that are marketing,” says John D’Agostino, a former Nymex executive and current exchange board member. “If people want to trade this thing, why wouldn’t you? This is a gift from the heavens.”

The report goes on to add that the exchange would add the Bitcoin contract onto its existing Nasdaq Futures platform (NFX).

So what’s next for Bitcoin?

Just when we thought Bitcoin has hit its theoretical maximum, something new comes up. Chances are that trading bitcoin futures will have a big impact on Bitcoin’s volatility, helping the entire cryptocurrency market reach new heights. Cause a Bitcoin future note is just a start — what’s stopping these firms from doing the same with Ethereum and a few other digital assets?

One thing is certain. The crypto party has just started, and everyone’s invited. Hop on while you still can.