The atmosphere was thick last night an hour before futures opened. Bitcoin was jittery, with fast price movements up and down, but swaying somewhat slowly downwards.
An entire generation, which had probably not even heard of CBOE before last week, was being introduced to the legacy system. While looking at the excitement in bitcoin’s price movements, their main question was where do we see futures prices, where are the charts?
To their surprise, there aren’t any open real time charts. What do you mean there is no cryptowatch version of these futures? Some probably asked. With some others probably mumbling about monopolies.
Because astonishingly you have to pay to see the real time price of bitcoin futures. Some probably said fine, take my money, but even then you might have to wait for some service providers take a day or two.
So everyone probably landed on CBOE’s 10 minutes delayed futures price. Quite an ugly page compared to what we’re used to, with almost no information except for the high, low and last price as well as volumes. No nice bid and asks walls, no pretty charts. Just a bland page.
Not that anyone was caring around 10 minutes before futures opened. With everyone wondering what will happen now as bitcoin enters the legacy market.
When the clock ticked precisely 11PM London time, bitcoin’s price begun instantly moving upwards with everyone starting to realize the market had opted for bullish as price rose by $700 literally in seconds.
At the same time the bitcoin ecosystem was probably collectively hitting refresh on that 10 minutes delayed page, which crashed.
Well, this is no better than our own ecosystem then, many probably thought. This thing can’t even handle a little DDoS, our sites get that all the time and still keep on running, usually. And at least we get free price data!
However, all that was probably quickly forgot when everyone managed to get a glimpse of the futures price. To their joy, it stood at an almost $1,000 premium after it had risen by around $1,000.
Wall street was bullish. The bitcoin show was to go on without drama or tragedy but with celebration as an historic day begun.
But within minutes trading was stopped. Apparently price was rising too fast so the market needed a minute or two to “cool-down.” And after they “cooled-down,” trading was stopped again because price was rising too fast. Yawn.
A day later now many are probably wondering well how exactly do I play these futures. The answer there depends and might make us very much appreciate what bitcoiners have built in their own financial system of sorts.
Because in the legacy system you need to register with a broker, a process that can take days, then for the pleasure you pay some considerable fees.
Moreover, the legacy world doesn’t work on weekends. How that will function with a 24/7 real bitcoin market remains to be seen, but it does feel like the legacy system hasn’t had much pressure to adapt to changing times.
Due to economies of scale, monopolies or concentration gradually develops. And once established, they can ignore their customers to some extent because their customers do not have much choice.
However, smart entrepreneurs, frustrated with the service provided, create better alternatives, starting a process of disruption, until eventually they become monopolies and it all repeats again.
Compared to the legacy system, our system appears to be a lot faster, with far more services, and a lot fairer with price data being opened. Of course it has its own problems, but as we saw with CBOE’s site crashing, some of those problems are in no way unique.
All of which might suggest that futures may be less influential on the market than might have been previously thought. They are not 24/7, they pause all the time when the real market doesn’t, and all of it feels distant, even old, with price data hard to access, probably as a legacy of the paper system.
So while something new has happened, with bitcoin traded in the old system, in many ways little has changed. For something to change, the two might need to merge somehow. CBOE’s futures, for example, could be incorporated into Gemini or Gdax. Then, we can easily access it and so influence it and be influenced by it.
As it stands now, few in this space will probably even notice what CBOE’s futures prices are after the excitement wanes and events move on. Just as few of them care what GBTC is trading at or the ETN.
A last point to make is regarding regulators. It can be argued that CBOE is a monopoly of sorts because CFTC denies access to new entrants or makes it very difficult. Now that we have seen just how outdated in many ways that legacy system appears, that should change.