“Taming the bubble”: investors bet on Bitcoin via derivatives markets

(Arstechnica) Bitcoin’s biggest asset is also its biggest liability—no government or regulator controls what people are willing to pay for a little piece of nearly-anonymous computer code. That fact may partially explain why the price of one bitcoin has shot up in recent days and weeks, only to come crashing down again on Wednesday.

On Thursday, Bitcoin’s largest exchange, Mt. Gox, suddenly suspended trading for 12 hours as part of what it described as a “market cooldown.” That pause is set to end at 9:00pm CT on Thursday evening.

It certainly doesn’t help matters that there’s new Mt. Gox-lookalike site serving malware. Also on Thursday, entrepreneurs Cameron and Tyler Winklevoss told the New York Times that they hold approximately 1 percent—roughly $11 million—in bitcoins. In short, Bitcoin may be poised to rise even further, or crash even deeper and faster than ever before.

Ars contacted three major investment banks to inquire if they had any bitcoin holdings—Goldman Sachs, JP Morgan Chase, and Credit Suisse.

“We have no comment,” said Andrew Williams, a spokesperson for Goldman Sachs. JP Morgan Chase and Credit Suisse did not respond.

Some say that the recent rise of more advanced bitcoin-related financial services, including hedge funds, futures, and derivatives markets, could help stabilize the future of Bitcoin. This week, a soon-to-launch New York-based “leveraged forex trading platform” for Bitcoin, called Coinsetter, announced that it had received $500,000 in venture capital.

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