How Futures Trading Changed Bitcoin Prices

Galina Hale, Arvind Krishnamurthy, Marianna Kudlyak and Patrick Shultz

FRBSF Economic Letter, 2018

Abstract: From Bitcoin?s inception in 2009 through mid-2017, its price remained under $4,000. In the second half of 2017, it climbed dramatically to nearly $20,000, but descended rapidly starting in mid-December. The peak price coincided with the introduction of bitcoin futures trading on the Chicago Mercantile Exchange. The rapid run-up and subsequent fall in the price after the introduction of futures does not appear to be a coincidence. Rather, it is consistent with trading behavior that typically accompanies the introduction of futures markets for an asset.

Date: 2018
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