Two major U.S. futures exchanges are launching bitcoin futures, which is adding fuel to the fire behind the cryptocurrency market, pushing prices over $17,000 per BTC this week. Although the underlying bitcoin market is unregulated, the two exchanges have created structured futures contracts around bitcoin, lending additional credibility to the asset.
This may make investments in bitcoin more appealing to the public, but the market has been extremely volatile, making bitcoin one of the highest risk markets available to investors.
Long-term, many bitcoin enthusiasts hope that it will function as an everyday currency, while others are treating it only as a speculative asset, like gold, and others yet have derided it, including JPMorgan Chase Chairman and CEO Jamie Dimon, who described it as a “fraud.” The term “bubble” is also quite popular among those who have compared it other skyrocketing fads chased by a naïve public.
Starting Monday, futures traders can put their cryptocurrency where their mouth is, provided they have the risk tolerance and have the nearly $50,000 per contract for the CME Group’s futures contract that starts trading Dec. 18.
Cotton market blooms
Cotton prices blew up to new a contract high on Friday as March futures prices topped 76 cents per pound. The commodity is being chased higher by investors watching the weak U.S. dollar (which makes U.S. cotton cheaper to rest of the world) and a developing problem with bollworms which are eating the crop in India, another major exporter.
Our American cotton crop survived the three hurricanes and flooding fairly well but now could face threats from a drought spreading into Texas. World demand continues strong and the rally in the U.S. stock market continues to support expectations of demand for the fiber.
One factor that could keep a lid on prices is the large stockpile that China has accumulated during the past couple of years.
Walt and Alex Breitinger are commodity futures brokers with Paragon Investments in Silver Lake, Kansas. Reach them at 800-411-3888 or paragoninvestments.com.