CME To Launch Bitcoin Futures

CME Group, the world’s largest derivatives exchange operator, has launched its own contract to wager on bitcoin.

According to Reuters, bitcoin investors expect futures volumes to perk up as a result of the move.

“The CME contract is based on a broader array of exchanges,” said Matt Osborne, chief investment officer of Altegris. “So, there is a possibility that the CME contract may generate more interest and more volume.”

Bitcoin reached another high on Friday, nearing $18,000 on the Luxembourg-based BitStamp platform, and has soared around 1,700 percent so far this year. In addition, Chicago-based Cboe’s bitcoin futures surged nearly 20 percent in their debut on Monday, with more than 4,000 contracts changing hands by the end of day's settlement.

While bitcoin has drawn attention for its price gains, it is also notoriously volatile. Its exchanges, along with digital currency wallets, have also struggled with issues like outages, denial-of-service (DDoS) attacks and hacks.

Still, discount brokerage TD Ameritrade announced last week that it would allow certain clients to trade Cboe bitcoin futures from Dec. 18. Some investors also believe the CME bitcoin futures could attract more demand.

Most analysts remain cautious, which is reflected in margin requirements for the contracts. The margin requirement at CME is 35 percent, and sits at 40 percent for Cboe. The margin for an S&P 500 futures contract, by contrast, is just 5 percent.

Andrew Busch, chief market intelligence officer of the U.S. Commodity Futures Trading Commission, also pointed out that the underlying cash market for bitcoin is still not regulated. “It’s important to keep that in mind when (investors) are trying to make a decision,” he added.



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