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In my previous article “CBOE completes the upgrade, will other future crypto come?” I’ve speculated that now that the CBOE had finished C is the latency reduction upgrade, it would begin to introduce more currencies. This prediction seems to have at least partially shown some validity with the statements from the CBOE Risk Management Conference on Friday that featured a fireside discussion with founders Gemini Tyler and Cameron Winklevoss. In the fireside conversation, Cameron and Tyler said the CBOE is interested in expanding to more cryptocurrencies. The only reason they do not have it yet is the lack of Gemini support for coins other than Bitcoin and Ethereum.
This is significant because it means that CBOE intends to issue futures contracts on other cryptocurrencies. The heist, it seems, is Gemini himself. For now, Gemini only offers Bitcoin and Ethereum. This is a problem since CBOE has an exclusive agreement with Gemini to use Gemini only to calculate its futures. Therefore, for the CBOE to add more coins, Gemini must also add more coins. It also means that Ethereum, which is already offered on Gemini, is likely to come into the future CBOE markets very soon.
What is the CBOE?
The Chicago Board Options Exchange (CBOE) is a futures market that was among the first to get the go-ahead to offer Bitcoin futures. Like all futures, they need a source of data to follow. In this case, this data source was the prices on the Gemini Stock Exchange founded by the famous billionaire (or infamous, if you’re a fan of The Social Network) Winklevoss Twins.
The partnership has been criticized in the past for several reasons. Aside from the lack of diversity in the coins offered on the stock exchange, the most important concern is the volume of transactions. The futures markets are fully based on Bitcoin’s performance on the Winklevosses trading platform and low transaction volume makes the platform easy to handle for relatively little money. For reference, while this article is being written CoinMarketCap has Bitcoin at $ 9,346.50 while Gemini has Bitcoin at $ 9,224.71. These price differences are not insignificant, especially on transactions involving millions of dollars. The manipulations of the market exploiting Gemini’s low trading volume have been a constant concern and the addition of more coins has the potential to exacerbate the problem by diluting trading volume of coins individual.
In line with my last article, it is safe to assume that Ethereum will be the next cryptocurrency to have a CBOE derivative. That’s # 2 on CoinMarketCap and the only other cryptocurrency that’s trading on Gemini for the moment. I would be surprised if nothing was announced next month.
At the same time, we can expect to see more coins added to Gemini. Considering Winklevosses’ comments on the CBOE’s pressure to add more coins, we can only assume that new coins added on Gemini will be the next line for the CBOE.
How will this affect crypto markets?
If the past is an indication, the introduction of new futures will result in a price boom. When the addition of Bitcoin was announced in CBOE markets, the price climbed 13%. It would not surprise me at all if we saw the price of Ethereums rise on news of its addition to the CBOE markets.
In addition, I anticipate huge price increases for the smaller market capitalization currencies added to Gemini. As it makes sense that most traders come to the same conclusion as we did and predict that any piece added to Gemini is something that the CBOE has pushed, given the special relationship between the two companies. Futures markets seemed to do two things up to now. First of all, they seem to have stabilized the price of Bitcoin (although this is or is not a causality or a correlation is very debatable). They have also legitimized the currencies in the eyes of many Wall Street traders now engaged in Bitcoin futures.
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