Swiss bank to launch bitcoin futures to allow betting against cryptocurrency

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November 16, 2017 11:26 AM EST

The newly launched logo of Swiss bank Vontobel is seen at an office building in Zurich, Switzerland September 18, 2017. REUTERS/Arnd Wiegmann

ZURICH (Reuters) - Swiss bank Vontobel said it will start trading Switzerland's first two mini futures to short bitcoin on Friday, giving investors a tool to bet against the value of the volatile cryptocurrency or to hedge bitcoin positions.

The launch of the two mini futures on the Swiss stock exchange by the country's second-biggest provider of structured products comes after CME Group Inc, the world's largest derivatives exchange operator, said it will launch a futures contract for bitcoin later this year.

When the value of bitcoin falls by 10 percent, the value of the more conservative of the two mini futures rises by almost 6 percent while the other gains almost 10 percent, according to the termsheets Vontobel published on Thursday.

The value of bitcoin has fluctuated wildly this month, plunging as much as 29 percent last week from its Nov. 8 record high of $7,888 and then recovering more than a third of its value in the last four days.

For the year, it is up more than 600 percent – a meteoric rise that has prompted many to warn that bitcoin has become a bubble that could be set to burst.

Mini futures are derivative instruments combining features of futures and options and tradable for considerably less than regular futures contracts.

The cryptocurrency remains a "speculative" investment that thrives because of its anonymous nature, BlackRock Inc Chief Executive Larry Fink said on Monday.

It has drawn scepticism from several senior bankers, including JP Morgan Chase & Co Chief Executive Jamie Dimon, who called bitcoin a fraud and said he would fire any traders at his bank who touched bitcoin.

However, the CEOs of Goldman Sachs Group Inc and Morgan Stanley said the cryptocurrency could be worth considering.

($1 = 0.9915 Swiss francs)

(Reporting by Joshua Franklin and Oliver Hirt; Additional reporting by Jemima Kelly in LONDON; Editing by Hugh Lawson)


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