A Bright Start for CME Futures

A Bright Start for CME Futures

A Bright Start for CME Futures

Bitcoin futures started trading Sunday night at CME Group Inc.'s venue, a week after Chicago rival Cboe Global Markets Inc. introduced similar derivatives on the volatile cryptocurrency.

As both CBOE and CME have released their respective Bitcoin Futures Contracts, Deutsche-Boerse would be wise to follow these results closely.

The top derivatives regulator in the USA has created a new information portal for cryptocurrencies, a move that came just days ahead of a major bitcoin futures launch.

Spot bitcoin eased 1.9 per cent on the Bitstamp exchange to US$18,650, after surging to a record high of US$19,666 on Sunday. Pricing was another factor that was more streamlined as the contracts are based on prices from four different exchanges unlike CBOE's which are only based on the one.

Bitcoin has continued its climb after a new futures contract facilitating short bets failed to hold back its upward trek, Bloomberg reported.

Early volumes have been light, and a short time ago around 460 contracts had changed hands on the most actively traded one-month forward contract.

Bitcoin surged toward $20,000 in the minutes before trading began at CME, before paring gains.

The launch of bitcoin futures is viewed as a major step in the digital currency's path toward legitimacy, which should encourage the entry of big institutional investors. "The CME futures are trading at a premium to Cboe futures, but the premium has come in a bit since the open", See said.

With its need for "further analysis", Ally Invest joins several other financial firms who are now not offering their clients access to bitcoin futures, including mutual fund company Fidelity Investments and Charles Schwab.

Disclosure: CME Group is an investor in Digital Currency Group, CoinDesk's parent company. The derivatives allow institutional investors to buy into the cryptocurrency trend and could pave the way for a bitcoin exchange-traded fund.

The general sentiment in the market remains one of caution and that has been reflected in margin requirements for the contracts.

Are Bitcoin futures good or bad for the crypto market? The margin requirement is 35 per cent at CME and 40 per cent at Cboe, reflecting bitcoin's volatility. The margin for an S&P 500 futures contract, by contrast, is just 5 per cent, analysts said.

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