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The futures trading legitimizes bitcoin to some degree, said Kevin Grimes, president of Westborough, Massachusetts-based Grimes & Co. It allows more institutional money to flow in, while giving firms a way to hedge positions.
The price gap shows people are seeking exposure to bitcoin without buying it directly, he said. “So in the short run that could change the supply and demand a little bit,” he said. “But in the grand scheme of things it probably is a good thing for bitcoin structurally, because it will allow for larger amounts of institutional money to more comfortably buy positions.”
The new futures will probably help create a more regulated and steady underlying market, paving the way for more additional products, hedge fund lawyer Stephen Bielecki of Kleinberg, Kaplan, Wolff & Cohen wrote in a note Monday. “Many anticipate” that the Securities and Exchange Commission will eventually approve an exchange-traded fund tied to bitcoin, he said.
For its part, bitcoin rose 9.6 percent to $17,148 on Monday -- a roughly 17-fold advance this year.
“Our view on bitcoin is unchanged,” said Tim Ng, chief investment officer of Clearbrook Global Advisors. “The valuation has no basis, as there are no assets to back it, nor does it have the faith and full credit of a recognized entity such as a central bank. This has been a one-way street with people putting in money, and no one coming out.”
This article was provided by Bloomberg News.