Chicago Stock Exchange institutionalizes Bitcoin

If the cryptonym recognition is not yet complete, it will be possible to bet on its evolution. Enough to make a volatile currency look serious.

The bitcoin will be worth $17,310 on January 17,2018, $1,000 more than today. This is what the Chicago Board Options Exchange (CBOE) predicted on Sunday, December 10, shortly before 9:00 p. m. local time, in the wake of the opening of the first futures market on the famous cryptomonnaie.

This premiere was very discreet, without any special celebration. Nevertheless, with 1400 contracts traded and a clear increase, it institutionalizes a currency invented in 2009, which is the subject of speculative madness and worth a total of 250 billion dollars. Bitcoin, which cost less than $1,000 at the beginning of the year, exceeded $17,000 last week.
Simple saver, don't expect to go through the Chicago Stock Exchange to speculate on the bitcoin. JP Morgan, Bank of America and Citigroup will not give their clients access to this market, nor will consumer brokerage firms like Schwab. The investment bank Goldman Sachs will do so, but with extreme care for wealthy and carefully selected clients.
Banks are divided between the temptation to participate in a juicy market - dozens of funds specialising in cryptocurrency have recently been launched - and the legal risk they take in allowing their customers to buy products that are worthless: A bond is a repayable loan; a currency is guaranteed by a central bank and an economy, while the bitcoin has no underlying assets. It is only the fruit of supply and demand.

Speculative bubble or ingenious invention?

The recognition of the bitcoin is not complete, far from it: the CBOE does not quote bitcoins but contracts in dollars indexed to the price of the bitcoin (the value of the latter is determined by an external stock exchange, Gemini, which specializes in the technically complex exchange of cryptomonnaies). The Chicago Mercantile Exchange (CME), which will follow in a week's time, will have four other exchanges (Bitstamp, GDAX, itBit and Kraken) as its reference. We can see that in Chicago, we are cautious: no one will buy or sell real bitcoins.

According to its advocates, the indirect quotation of bitcoin in Chicago, which allows for forward selling and therefore speculation to fall, could temper the bullish madness. Precautionary measures have been taken to avoid bankruptcies in this highly volatile market: a deposit of more than 40% of the contract price will be required, while price fluctuations of more than 10% and 20% will lead to a temporary halt to quotations.

On paper, it seems possible to indirectly manipulate the Chicago market by buying or selling real bitcoins on the five partner exchanges of the CME and CBOE, which have very low volumes. But, according to the Wall Street Journal, these exchanges say they have taken anti-money laundering measures and tightened their regulation.

In the meantime, history will have to decide between those who denounce a speculative bubble or even a scam and those who discover an ingenious invention, the currency of tomorrow. Alan Greenspan, the former president of the U. S. Federal Reserve, was one of the first to say that bitcoin was not a "rational currency". He compared it to the "Continental", paper money created by the American revolutionaries in 1775 and which finally collapsed in 1782.

Closed circle

On the other hand, bitcoin has major innovations: like gold, it does not depend on a central bank or a political authority, it is very practical for laundering money, escaping the State and hyperinflation - the quantity of bitcoins, currently 16.7 million, cannot exceed 21 million - which explains its success in China or in failed countries such as Venezuela. Bitcoin is also not safe, as nearly one million bitcoins have been hacked or stolen.

This has so far been of little concern to central banks, as the masses involved are not large enough. Bitcoins, many of whom are dormant in computers, rather live in a closed circle - they do not serve as a currency of exchange or a real counterpart. Their collapse would have no systemic effect at this time.