Menu IconA vertical stack of three evenly spaced horizontal lines. Everyone is assuming that bitcoin is largely disconnected from other financial markets so there will be little contagion if there is a crash. But Goldman Sachs and others are planning to bitcoin flow bitcoin futures, which will allow people to trade derivatives and short bitcoin. Some companies have decided to stop accepting bitcoin as payment.
The adjacent ICO market is heavily connected to bitcoin. These are all channels through which a bitcoin price collapse might trigger contagion in other markets. And nobody cares it’s a bubble because everyone who has bought in is making money! Much of that jokey background noise comes from the assumption that the only people who will get hurt when the price collapses are those who bought bitcoin. And those who bought bitcoin surely knew that was the risk, right? So there will be no contagion in the real world. Goldman Sachs will clear bitcoin futures trading for some of its clients, according to a person familiar with the plans.
The derivatives, which allow traders to bet on the cryptocurrency’s price without buying the underlying asset, will be offered by the Cboe Futures Exchange from Sunday. The CME Group will launch its own version of the product later in December. Rather, it is that now there is a clear path for contagion from bitcoin to seep into the normal markets: Via derivative trades and shorts gone wrong, transacted by Goldman, Cboe, and CME. At one level, this is still OK. A bitcoin crash might not be big enough to dent the real economy. But one of the reasons bitcoin’s price only goes upward is precisely because you can only buy or sell it. It might be healthy if the price of bitcoin reflected the bears in the market as well as the bulls.