This file photo taken on November 20, 2017 shows gold plated souvenir Bitcoin coins arranged for a photograph in London. Economists say bitcoin is the monetary equivalent of Uber, since it bypasses central bank regulation and could be attractive for financially fragile countries. Analysts warn that it is the lack of oversight that opens up the users of cryptocurrencies such as bitcoin to risks and dangers. (AFP FILE PHOTO)
NEW YORK — The price of bitcoin swung wildly on Thursday, rising to more than $19,000 only to fall sharply within minutes, as both the euphoria and anxiety surrounding the virtual currency escalated just days before trading in bitcoin futures begins on a major United States exchange.
The concerns about its volatility have led some Wall Street banks and trade groups to raise concerns about the potential implications of trading bitcoin. Banks also appear likely to limit customers’ access to the futures when they first start trading.
Bitcoin was valued at $17,167 as of 6:00 p.m. EST, according to large bitcoin exchange Coinbase, after briefly surging above $19,000 on Thursday morning. At the start of 2017, one bitcoin was worth less than $1,000.
Bitcoin’s wild swings occurred as Wall Street prepares for bitcoin futures to start trading on the Chicago Board Options Exchange (CBOE) on Sunday evening and on the Chicago Mercantile Exchange a week later. The futures are designed to reflect the price of bitcoin without an investor having to physically hold the currency, not unlike how oil, gold, copper, or cocoa prices are determined by futures contracts.
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Yet the dawn of futures trading has some parties on Wall Street concerned. A group of banks, brokerages, and clearinghouses came out and complained that federal regulators approved the futures too quickly and without properly considering the risks inherent in bitcoin.
The Futures Industry Association, a trade association that represents Wall Street banks, brokerages, and clearinghouses, sent a letter to the Commodities Futures Trading Commission this week, saying the institutions should have been consulted before trading in bitcoin futures was approved. The association’s members expressed concern that they could be on the hook for large sums of money if extreme volatility in bitcoin resulted in big losses for some customers.
