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Bitcoin Smashes Record After Coinbase Resumes Trading, Futs Arb Spread Tumbles

Courtesy of ZeroHedge. View original post here.

Something just snapped in the cryptosphere…

First, we noted that the spread between Bitcoin spot and futures was tumbling…

Something we would expect to close:

“Arbitrage will close that gap, but it will be days and weeks,” Cboe Chief Executive Officer Ed Tilly said on Bloomberg Television Monday, less than a day after launching the product.

“If you’re doing a cash-settled future, it’s just a bet,” said Aaron Brown, a former managing director at quant hedge fund AQR Capital Management who invests in the cryptocurrency and writes for Bloomberg Prophets.

“If that’s not related to any underlying physical transaction, the only people who want to do it are gamblers.”

The wide arb spread is “a big issue. It’s an illiquidity, it has to go away.”

The price gap between bitcoin and bitcoin futures won’t last forever, said Dave Weisberger, CEO of CoinRoutes, a cryptocurrency data and order routing company.

“The futures will ping-pong between premium and discount,” he said.

“I suspect at some point, potentially triggered by a negative event, it will flip. Markets go up and down, and bitcoin has been no different. It’s just been fast.”

At the same time as Bitcoin rallied so Litecoin and Ethereum tumbled…

And then Coinbase broke…

And when it came back online – huge volume spiked Bitcoin back above $17,000

To a new record high on BitStamp…


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