On December 10th at 6pm ET the Chicago Board of Options Exchange (CBOE) ushered in a new asset class which will live on forever. This is the day that will earmark the beginning of trading in an instrument which is changing the way we invest and the way the consumer pays for goods and services. Today is an important date because investors now have a regulated, leveraged way to buy and sell digital currencies in well known legacy markets. Tonight the Chicago Mercantile Exchange (NYSE:CME) will begin futures trading adding a second regulated market. The world is about to change for now and forever. You can get more information here from the CME.
The CME futures contract, which trades under the symbol XBT, will go live at 6:00 p.m. ET.
It is important to look at some Bitcoin history and date back to the second half of 2013 which was a harbinger of things to come for the digital currency, and it changed the way miners and investors viewed digital currency as an asset class. This initial move drew many to the cryptocurrency markets, but not only because of higher prices but because it was clear this market would bring volatility.
Subsequently, the coins collapsed to $170 from the $1200 high, and it took 2 years to eclipse the old high. Investors looked on and were immediately drawn to this new asset.
Bitcoin surprised everyone and began a march higher, trading $18,000 and dominating the media cycle. This dizzying price extension captured investors’ attention and prompted understanding the value of the blockchain and raised the global adoption rate.
Satoshi Nakamoto, wherever you are, I know you are giggling about your monumental creation and the fact is… you made the most important contribution to investing in my lifetime. Bitcoin now has a $300 billion dollar valuation and is sought after by every investor walking the earth.
The reason behind the lower coin prices (back in 2013) was attributed to Mt. Gox (the largest coin based exchange at the time) getting hacked and its founder being accused of falsifying the number of Bitcoins behind the exchange. In short he got robbed/hacked and he lied about it to his followers/investors, and the coins tanked.
Once the news hit about Mt. Gox prices fell from that $1200 high and plummeted to $550, they went on to fall 60%, and they shook the core of many early adopters and nearly extinguished the future of digital currency. Bitcoin would continue to grind lower through all of 2014, but in January 2015 the decline stopped at $170 per Bitcoin.
Since January 2015 the price of Bitcoin exploded from this $200 bottom, and as we approach January 2018 Bitcoin traded as high as $18,000 per coin on some exchanges increasing in value in this 3 year period by an astonishing $17,800 per Coin and the price itself has opened the minds of everyone about blockchain, tokenization and alternative methods to pay for goods and services.
Bitcoin was never intended to be an investment vehicle, it was designed to be a digital unit of barter and currency. This is why the story is so interesting, and tonight the CBOE will trade an important Option contract ushering in the currency that will change the way we pay for things.