The much-anticipated futures contract for Bitcoin started trading today. The CBOE’s CFE market started offering the traditional financial instrument in the early Asian hours. Despite the widely hyped launch, market participants appear to be mainly from the retail space.

Institutional investors are staying out of the market amid increasing worries about the clearing of the contract. The CBOE’s Bitcoin futures contract which is priced off of a single auction at 21:00 GMT on the final settlement date of the Gemini crypto exchange is seeing mixed interest.

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Playback of first 4 hours of trading on #XBT_F @CBOE #FT71 pic.twitter.com/43C3bgCB5i

— Investor/RT (@InvestorRT) December 11, 2017

While some pundits are arguing that the VIX futures contract hasn’t seen much trading initially, the case with Bitcoin is rather different. The media noise surrounding the launch of the product and the hype around cryptocurrencies can’t really be compared with the launch of the VIX in 2004.

Volatile Price Action

Price action in Bitcoin today continued to be wild in line with recent weeks. After the opening hour at 23:00 GMT on Sunday, exchange-traded Bitcoin was changing hands at around $15,000. Both circuit breakers in the futures contract were triggered during the extended hours trading session in Asian and early European hours.

The website of the CBOE crashed shortly after the open with the contract spiking higher by 10 percent and triggering the first ever circuit breaker move at the exchange. After trading stopped for two minutes, it resumed until 5:05 GMT when it was halted again as the second trigger barrier was reached at 20 percent.

The contract was suspended for 5 minutes and reopened trading at 05:10 GMT. At present, prices are hovering about 12 percent higher since the start of the trading day at $17,500. Bitstamp is quoting Bitcoin at $16,470.

Liquidity and Trading Volumes

Since the start of the day, when the contract’s price was on par with crypto exchange prices, liquidity was an issue. Clearing worries have prevented major institutions from joining the market in the immediate aftermath of the launch.

Skepticism from the institutional side did not deter retail investors and brokers from offering the contract. TradeStation is offering Bitcoin futures trading from day one, requiring 150% of the margin that the CBOE is demanding, i.e. about 66 percent.

Trading started off slowly, with data published by the founder of Chicago-based market data company Nanex LLC, Eric Scott Hunsader, comparing the liquidity on the contract with oat futures for January:

CBOE #BTC futures liquidity right now is thinner than oat futures in January.

— Eric Scott Hunsader (@nanexllc) December 10, 2017

As the day progressed, Hunsader shared that the CBOE Bitcoin futures contract is the 66th most actively traded, right between soybean oil and corn futures.

Reminding us about the challenges associated with high-frequency trading, Hunsader kindly reminds us of what algos are capable of in thin liquidity conditions.

During the first hours of trading of the Bitcoin futures contract, volumes were dwarfed when compared to the amounts of BTC traded on physical exchanges:

Still early, but some perspective: CBOE bitcoin futures traded $9.1 million notional in first hour. During same period about $170 million traded on Bitfinex. pic.twitter.com/DbHpDjj4z9

— Yuji Nakamura (@ynakamura56) December 11, 2017