Menu IconA what is the exchange rate for bitcoin stack of three evenly spaced horizontal lines. Cboe Global Markets’ bitcoin futures product launches Sunday. Cboe is basing its bitcoin futures contract on pricing on Gemini, the cryptocurrency exchange founded by the Winklevoss twins.
Bitcoin futures will allow investors to bet on the future price of the red-hot cryptocurrency. But a number of concerns hang over Gemini including low volumes on the exchange and system outages. All eyes will be on Cboe Global Markets on Sunday when it launches futures contracts for bitcoin. The Chicago-based derivatives market is the first established exchange to roll-out futures for the red-hot digital currency.
Futures are contracts that will let investors bet on the coin’s future price. While bitcoin enthusiasts are excited about the attention — and big money — a new futures market could bring to the digital coin, concerns hang over Gemini, the cryptocurrency exchange Cboe is working with to launch the contracts. But Gemini is still small, and trading in its price-setting auction is thin enough that it could be manipulated, according to critics. Cboe will be basing the price of its futures on this auction, which means any sudden shift in the set price could make the difference between a contract that is a money maker or a money loser.
Then there’s the fact that Gemini has suffered outages when demand for bitcoin skyrockets. Gemini tracks the overall market pretty closely with an average difference of just 0. The product was designed with one exchange to make it easier for traders to hedge their holdings of the underlying asset. And Cboe would rely on a backup index based on data from six exchanges if Gemini were to crash. Gemini did not respond to an email seeking comment. Smallest among rivals Gemini is much smaller than many of its rivals in the bitcoin-trading space.
Ranked fourteenth globally by 24-hour trading volumes, the exchange sees only 1. Its size is concerning to some trading firms which don’t like the idea of an entire market for futures being based on data from one exchange with thin volumes. The logic is, since Gemini is so small, its activity can’t paint an accurate picture of the broader crypto-market. Cboe’s futures will be based on the auction price of bitcoin on the Gemini exchange. Settlements for the contracts, the payout a trader either receives or pays out for their bet, will be determined each day at 4:00 p.