Giant CME exchange launches bitcoin futures to muted response

Joanna Estrada
December 18, 2017

By 7:50 a.m. EST (1220 GMT) Monday the futures contract that expires in January was at $19,560, up $60.

"Introducing futures contracts in the U.S. was meant to give short-sellers access to the market and improve liquidity, but availability is still fairly restricted".

Cboe Global Markets Inc launched a bitcoin futures contract on December 10. The CME Group launched its bitcoin future on December 17 with the contract opening at what is now its session high and dropping over 6% within the first half hour. Each bitcoin was priced at US$1,000 each in January on the CoinDesk index, a specialist virtual currency news site that tracks prices from exchanges such as Bitstamp, Coinbase and Bitfinex.

The week-old bitcoin futures contract at the Cboe was last trading at $18,890, up 4.3 percent.

"With every new milestone there's fresh discussion around bitcoin's legitimacy and potential, both as a trading instrument and revolutionary digital currency", said Lee Wild, head of equity strategy at Interactive Investor. Trading volume and open interest so far is minimal - barely 400 contracts - but that will surely rise in the coming months.

"This is a brand-new asset class and I think perhaps a lot of investors want to sit back and see how this plays out before dipping their toes in this market".

Futures contracts differ between the CME and the CBOE versions.

Several investors believe that CME might garner more attention from institutional investors, however, since the final settlement price is derived from multiple exchanges.

Bitcoin was set up in 2008 by an individual or group calling itself Satoshi Nakamoto, and was the first digital currency to successfully use cryptography to keep transactions secure and hidden, making traditional financial regulation hard if not impossible.

"The introduction by CME and CBOE has added validity acknowledging bitcoin as a legitimate asset". Futures contracts allow customers to take a view on the future price of the digital currency.

"Until it becomes easier to sell short, buying dries up, or there are tech issues or a major hack, bitcoin will keep passing milestones with alarming regularity".

Other reports by Click Lancashire

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