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Twas The Night Before Bitcoin Futures

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Bitcoin Present (Getty Images)

After an extremely volatile week, even by Bitcoin standards, I, like many of you are waiting for Bitcoin futures to open.

Will this really create the access that I once hoped for?&nbsp; As I wrote recently, I find that people most excited about Bitcoin futures are Bitcoin owners, making me question how much new demand will be generated by the launch.

Recent volatility will make many participants reluctant to enter the market now – either as long or as short.

It is unclear, at the time of writing this how many clearing members will allow their clients to trade Bitcoin futures and what margins they will require (the minimum requirement that I last saw, set by the exchange was 35%, which seems inadequate given the recent volatility).

I suspect that volumes will actually be small to start and that there will be more sellers of the contract than buyers as it seems like a good way to monetize recent price appreciation and despite the increasing publicity surrounding Bitcoin, my sense is that the recent spike higher has dampened the enthusiasm for newbies to participate (yes, I used the too newbie in reference to an &quot;asset class&quot; with a total market valuation of greater than $200 billion (again, that was a value I saw recently that seemed in line with other reports, though it moves fast and is unclear whether it is just for all bitcoins in existence or those that are still to be mined).

One fact that I think is remarkable is that GBTC – the Bitcoin&nbsp;Investment Trust closed on Friday December 1 at a 79% premium to its Net Asset Value and it closed Friday December 8 at only a 13% premium.&nbsp;&nbsp;I think this is another indication that the price of Bitcoin rose ahead of the futures launch in expectation of new demand and that new demand might not be there (this is the lowest premium over NAV for GBTC since June 1, 2017).

Now in a long tradition of Wall Street at this time of the year, I will attempt to convert Clement Moore’s poem into a version mostly to entertain you as you wait for the launch.&nbsp; I will be following the opening of futures and the first week very closely – to see if I need to revise my opinion.&nbsp; In the meantime, I hope you enjoy ‘Twas The Night Before Bitcoin.

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Bitcoin Present (Getty Images)

After an extremely volatile week, even by Bitcoin standards, I, like many of you are waiting for Bitcoin futures to open.

Will this really create the access that I once hoped for?  As I wrote recently, I find that people most excited about Bitcoin futures are Bitcoin owners, making me question how much new demand will be generated by the launch.

Recent volatility will make many participants reluctant to enter the market now – either as long or as short.

It is unclear, at the time of writing this how many clearing members will allow their clients to trade Bitcoin futures and what margins they will require (the minimum requirement that I last saw, set by the exchange was 35%, which seems inadequate given the recent volatility).

I suspect that volumes will actually be small to start and that there will be more sellers of the contract than buyers as it seems like a good way to monetize recent price appreciation and despite the increasing publicity surrounding Bitcoin, my sense is that the recent spike higher has dampened the enthusiasm for newbies to participate (yes, I used the too newbie in reference to an “asset class” with a total market valuation of greater than $200 billion (again, that was a value I saw recently that seemed in line with other reports, though it moves fast and is unclear whether it is just for all bitcoins in existence or those that are still to be mined).

One fact that I think is remarkable is that GBTC – the Bitcoin Investment Trust closed on Friday December 1 at a 79% premium to its Net Asset Value and it closed Friday December 8 at only a 13% premium.  I think this is another indication that the price of Bitcoin rose ahead of the futures launch in expectation of new demand and that new demand might not be there (this is the lowest premium over NAV for GBTC since June 1, 2017).

Now in a long tradition of Wall Street at this time of the year, I will attempt to convert Clement Moore’s poem into a version mostly to entertain you as you wait for the launch.  I will be following the opening of futures and the first week very closely – to see if I need to revise my opinion.  In the meantime, I hope you enjoy ‘Twas The Night Before Bitcoin.

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