Chart of the Week: Bring on the Bitcoin Futures?

With the ECB doing everything they can to talk down the Euro, the Pound rallying yesterday with a rate hike in Britain, and the Yen doing what it does in response to the trillions of Yen thrown at the Japanese economy to no avail – It’s hard to imagine little Bitcoin, a digital currency grabbing the currency headlines.

But Bitcoin is so much more exciting to talk about than Greece or Abenomics or the like. Only in Bitcoin does the shutting down of a website used to sell illegal drugs cause the currency to plummet, via Reuters.

“The price of the bitcoin digital currency dropped [in early October], after U.S. law enforcement authorities shut down Silk Road, an online marketplace used to buy and sell illegal drugs.

The charges against Silk Road generated sales of more than 9.5 million bitcoins, roughly equivalent to $1.2 billion. There are currently about 11.8 million bitcoins in circulation.

Supporters say using bitcoins offers benefits including lower fraud risk and increased privacy, though critics argue the anonymity it offers makes the currency a magnet for drug transactions, money-laundering and other illegal activities.”

But apparently that website bust was just a blip in the rocket ship like chart of Bitcoin’s value….

Bit Coin(Disclaimer: Past performance is not necessarily indicative of future results)
Source: StockTwits

Bitcoin jumped from 140 to 435 in less than a month… that’s around a 210% gain… Not bad. Especially for the guy who bought  $27 dollars worth or Bitcoin back in 2009 to find it was suddenly worth $866,000. But by our calculation it’s now worth $2.1 Million.

We have serious doubts that guy or anyone else owning Bitcoins would ever be able to get a check for cold hard cash in exchange for their Bitcoin fortune, but what’s the difference between those pieces of paper in your pocket that are only worth something because everyone agrees they are.

The more interesting thing to us in the managed futures world, who are semi-starved for a trend, is looking at this parabolic trend in Bitcoin and wishing there were a futures market tracking it so our clients could participate. Come on CME… what do you think? ICE? Anyone? Futures on Bitcoins would be even better than Bitcoins themselves, with none of the pesky issues of how to turn the Bitcoins back into actual cash. They could be worth $xx dollars per point, and any gains or losses would come out of your account (in actual cash).

 





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Comments

  1. brad says

    serious doubts about convertibility? I’ve turned BTC into 100k in about 10 seconds on mt.gox and had the money wired to my local bank the next day. Liquidity is there.

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