Complex Made Simple

Bitcoin aftershocks: Don’t mortgage your house just yet!

Bitcoin futures maturing in January were at $17,970, with 237 contracts traded compared with 3,956 contracts on the first day, said Reuters.

The Bitcoin futures trading quake is now sending aftershocks following a couple of days on the CBOE global Markets exchange but the true seismic event will come when the CME trades Bitcoin as a derivative next week.

Is the digital currency ready to join an exchange that has 9.3 million transactions daily, give or take?

The CME could push the currency to new price heights and heavy trading could stabilize volatility.

But what early warning signs can we learn from?

Read: 11 things you need to know about Bitcoin following its futures trading debut

First shock waves

Hussein Sayed, Chief Market Strategist at FXTM,  said that after surging to a new all-time high on Monday, Bitcoin fell below $16,000, before recovering some of its losses.

“The CBOE’s Bitcoin futures proved to be more volatile than the original asset itself, although futures contracts are meant to tame volatility,” Sayed said in a note to AMEinfo.

“The fear of short sellers attacking the bitcoin didn’t arise yesterday, indicating that the cryptocurrency isn’t seen yet as the big short. However, what scares me now is that people are taking out mortgages in order to buy bitcoins according to U.S. securities regulator, and this is not a good sign”.

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No time for downtime

A major international Bitcoin exchange Gemini extended a scheduled maintenance of its site after a massive bitcoin sell-off.

The outage coincided with a massive bitcoin sell-off, meaning users weren’t able to capitalise on trading, according to the company told.

Spokesperson: Gregg Petersen, Regional Sales Vice President, MEA, Veeam Software told AMEinfo: “As Bitcoin rapidly increases in value it is ever more vital to ensure the currency can be traded 24.7.365. It’s no longer acceptable for downtime in any form of modern day business, but this example is particularly damaging. As the outage experienced by Gemini over the weekend shows, for the users of the exchange to have even a minute of downtime is hugely detrimental to their trading and results in missed opportunities to profit and stop a loss.”

Watch out! Bitcoin’s ‘Futures Trading’ may not be too bright

He added: “While planned downtime was once an acceptable excuse for a lack of service, the digital-savvy modern customer takes it for granted that digital services ‘just happen’ and failing to ensure this only serves to infuriate them – as can be seen in the social media backlash to Gemini’s outage. After all, from a customer’s perspective planned downtime comes across as: “You’re doing maintenance, on your systems, to comply with your legislation. But I’m losing out as a result.”

Business implications of such an outage are huge, both financially and reputationally.

Veeam research earlier this year found that downtime now costs businesses an average of $21.8 million per year. But furthermore, suffering a disruption to availability could also irretrievably damage brand reputation and see customers take their business to a rival company.

“Today’s tech savvy users are unforgiving as ever and this outage highlights that even major businesses funded by billionaires can’t afford to be complacent with service availability,” Petersen said.

Read: The Jerusalem bombshell puts billions of American regional business at risk

Bitcoin Billionaires
According to the Telegraph, there are currently 10 Bitcoin billionaires, quoting Bitinfo a site tracking global transactions of the cryptocurrency.

“The price of Bitcoinhas rocketed from less than $2,000 six months ago to more than $16,000, making many people very rich in the process. The price is currently $16,832,” it said.

According to Bitinfo, there are 10 “digital wallets” holding more than $1bn worth of Bitcoin.

The telegraph named Tyler and Cameron Winklevoss, the twins who sued Facebook creator Mark Zuckerberg, claiming he stole their idea for the social network, are thought to have become billionaires by buying $11m worth of Bitcoin in 2013 and retaining ownership  of some 100,000 units which at current prices would be worth $1.68bn .