The trading of bitcoin futures is scheduled to go live next week on the Cboe, and later in the month, on the CME.  As bitcoin hits mainstream markets, some folks are expecting major questions about its ultimate viability as a currency to potentially be answered.  I’m not so sure.  But an eventful several weeks lies ahead, and here are a couple of things I’ll be watching for:

  • How will brokers and the exchanges support the (potentially high) volume of trades?
  • What will be the prevailing bid ask spread?  And how will it compare to recent trends?
  • How high will margin requirements be? (After initial expectations of 30%, some brokers are reportedly now asking for 50%, and I wonder what expectations will be after the first several trading sessions).
  • How will exchange-based futures trading impact price volatility?
  • How much (or little) will futures trading increase interest among professional traders?
  • (And scarier): Will retail investors start to participate in even greater numbers, given bitcoin’s eye-watering gains and ostensibly greater legitimacy?

There are, of course, a number of larger questions, too, that I will continue to have in the back of my mind, though they admittedly won’t necessarily be answered next week, or for that matter, this year.  Still, I think they’re worth noting:

  • How quickly will other firms (and funds) enter the space as market makers? And what kinds of firms will they be?
  • How will regulators expand their surveillance of the bitcoin market as futures trading evolves?  And how will the CFTC, FINRA and SEC carve out the division of labor?
  • Will futures speed the development of bitcoin ETFs?
  • How quickly might futures trading evolve for other cryptocurrencies? (And not just etherium!)

Any other thoughts on what to watch out for?  Let me know @ChrisBrummerDr

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