CME Bitcoin Futures Likely Coming This Year
CME Group will launch its highly anticipated bitcoin futures contract sometime next month, according to people familiar with the matter. Earlier in the day, the group’s website erroneously said the contract would begin trading on Dec. 11 before admitting it was posted in error. Nevertheless, the world’s largest futures exchange said its bitcoin contract was still due before the end of the year.
CME Bitcoin Futures
The CME futures contract will be peg the price of bitcoin against the U.S. dollar, and will be cash settled. It will have a contract unit of five index points that is equivalent to $25. The contract will be listed on CME, Clearport and CME’s Globex standard time.
In an effort to stem volatility, CME will allow bitcoin futures to be traded at prices 20% above or below the previous day’s settlement price.
CME announced its involvement in cryptocurrency on Oct. 31. At the time, chairman and CEO Terry Duffy issued the following statement:
“Given increasing client interest in the evolving cryptocurrency markets, we have decided to introduce a bitcoin futures contract. As the world’s largest regulated FX marketplace, CME Group is the natural home for this new vehicle that will provide investors with transparency, price discovery and risk transfer capabilities.”
At the time of writing, CME Group has yet to file with the U.S. Commodity Futures Trading Commission (CFTC) to launch its bitcoin product, according to the company’s spokesperson. There appears to be no timetable for when those discussions will occur.
CME isn’t the only institution venturing into bitcoin. Rival Chicago Board Options Exchange (CBOE) is also planning to roll out a bitcoin futures contract in the near future, and is in active discussion with the CFTC.
CBOE President Chris Concannon has also indicated an interest in launching a bitcoin ETF. In a recent interview with Bloomberg Markets, Concannon said: “With regulated futures of a certain asset class like a bitcoin, you do have an opportunity to introduce ETFs and over time we do envision ETFs coming to market.”
Institutional Demand on the Rise
CME’s foray into the digital currency market comes at a time of heightened demand for the alternative asset class. Earlier this week, cryptocurrency exchange Coinbase announced the creation of a custodial account for large institutional players holding in excess of $10 million worth of assets. Coinbase CEO Brian Armstrong said the custodial service will be launched sometime in 2018.
At last check, Coinbase had over 14 million account holders. Its custodial services will support bitcoin, Litecoin, Ethereum and a bevy of ERC20 tokens.
Bitcoin Price Levels
Bitcoin surged to new record highs on Monday, as prices approached $8,300 for the first time ever. BTC/USD was last seen hovering around $8,290 for a total market cap of $138.6 billion.
The world’s largest cryptocurrency has gained a staggering 17% over the past five days and is up more than 1,000% compared to year-ago levels.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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