Bitcoin billionaire Winklevoss sees 20-fold valuation surge

The twins' Gemini exchange to provide data for Cboe futures, due today

Cameron Winklevoss, thought to be one of the largest holders of bitcoin, thinks the cryptocurrency’s blazing gains this year are just the start. He predicts it will rise as much as 20-fold as investors come to view it as an upgrade to gold.

Wall Street’s plan to launch futures contracts on Sunday, making it easier to bet against the digital currency’s rally in recent months, is making some enthusiasts nervous - but not Winklevoss. He’s one of the famed 36-year-old twins who played an early role in Facebook Inc’s formation, then dedicated part of their fortune to the cryptocurrency and have since tried to win approval for a bitcoin trading vehicle.

Winklevoss bases his price projection on the market value of gold, which he pegged at about $6 trillion and others calculate at closer to $7.5 trillion. Investors are beginning to embrace the idea that bitcoin, “mined” by computers performing complex calculations, is more portable and divisible than the precious metal, he said.

“We think that bitcoin is a gold disruptor,” Winklevoss said in a telephone interview on Friday, predicting it may yet appreciate by 10 to 20 times its current value. “We think it’s just the beginning. We are definitely holders.”

Winklevoss can point to a strong track record as a bitcoin investor. He and his brother Tyler said in 2013 that they owned almost $11 million worth of bitcoins. If they retained that stake it would be valued at more than $1.7 billion today, according to the Bloomberg Billionaires Index. The ranking calculates they each have a $1-billion fortune as of Friday after taking into account other assets. Cameron Winklevoss declined to comment on his current bitcoin holdings or his net worth.

While enthusiasts have long argued bitcoin’s merits as a payment system, public sentiment has warmed this year, eventually turning into a frenzy. As people around the world snapped up coins, prices surged, briefly surpassing $16,000 this week before settling above $15,600 on Friday. More than 100 hedge funds have popped up to bet on its swings. The new futures contracts may facilitate those wagers, while also pushing the crytpocurrency further into the realm of mainstream finance.

The Winklevosses’ Gemini exchange is preparing to support the launch of Cboe Global Markets Inc’s bitcoin futures on Sunday. Their platform has its own data center running its own hardware and infrastructure, Cameron Winklevoss said.

“We think we are in a good spot and ready for game time,” he said.

FUTURES FACTBOX

Cboe Global Markets Inc and CME Group Inc will launch futures contracts on bitcoin on December 10 and December 17, respectively. Here are some of the differences between the products to be offered by the exchange operators:

CONTRACT & PRICING

• Cboe ticker XBT; will equal one bitcoin 
• CME ticker BTC; will equal five bitcoins 
• Both contracts will be settled in US dollars

Sources: Reuters, Cboe, CME

SETTLEMENT

• Cboe’s contract will be priced off of a single auction at 4 pm Eastern time (2100 GMT) on the final settlement date on the Gemini cryptocurrency exchange
• CME’s contract will be priced off of the CME Bitcoin Reference Rate, an index that references pricing data from cryptocurrency exchanges, currently made up of Bitstamp, GDAX, itBit and Kraken

CONTRACT EXPIRATIONS

• Cboe may list up to 4 weekly contracts, 3 near-term serial months, and 3 months on the March quarterly cycle 
• CME to list monthly contracts for the nearest two months in the March quarterly cycle (March, June, Sept, Dec) plus the nearest two serial months not in the March quarterly cycle 

PRICE LIMITS AND TRADING HALTS

• Cboe will halt trading in its contract for 2 minutes if the best bid in the XBT futures contract closest to expiration is 10% or more above or below the daily settlement price of that contract on the prior business day
• Once trading resumes, if the best bid in the XBT futures contract closest to expiration is 20% or more above or below the daily settlement price of that contract on the prior business day, the futures will be halted for 5 minutes
• CME will apply price limits, also known as circuit breakers, to its bitcoin futures of 7%, 13%, and 20% to the futures fixing price. Trading will not be allowed outside of the 20% price limit

Sources: Reuters, Cboe, CME