The Allure of Bitcoin Futures Trading

bitcoin trading

The futures trading for Bitcoin continues to grow since both CME, as well as Cboe, launched in late 2017.

The crypto experts think that after the volatility reduced, and with more clear regulations the Bitcoin market is now more appealing to mainstream investors.

The crypto market analysts say “Bitcoin futures trading will continue to grow and become popular among mainstream investors.”

Tim McCourt is the head of equity products, as well as alternative investments at CME, said that “We have seen a continued growth both regarding the average daily volume and open interest.”

The futures trading volume has constantly increased since it is first launched in December. The product is not a single product.

Therefore, we’ve both supplies as well as demand. Moreover, customer demand is strong because the relationship between the futures and cash market have a tight basis spread.

Now the reports from CME shows that there was a massive spike in Bitcoin futures trading on July 5, 2018, with 6739 contracts. This figure is on an average is more than 2800 contracts. Mati Greenspan of eToro said that “the spike was a misnomer given that there wasn’t any corresponding surge in Bitcoin’s price during the same period.”

After all, these let’s talk about the CME Group

What is the CME Group?

CME Group

CME Group is one of the biggest financial exchange you’ve never heard. The Chicago-headquartered organization own owns the Dow Jones Stock and economic indices and CME Clearing Services that proffers settlement and clearing of the exchange trades.

The CME was formed in 2007 which stands for Chicago Mercantile Exchange merged with the Chicago Board of Trade(CBOT). CME Group isn’t wasting any time implementing bitcoin futures trading.

Also, the company plans to implement bitcoin futures trading before the end of the year 2017.

How CME Bitcoin Futures Contract Affect Work?

CME’s bitcoin futures contract will settle in cash and uses a daily price from CME CF Bitcoin Reference Rate. CME collects its data based on the cost of bitcoin from the exchanges such as GDAX, Bitstamp, itBit, as well as Kraken.

However, CME doesn’t use Gemini for its reference rate. However, it is one of the world’s other largest cryptocurrency exchanges, and finally, make a deal with the Cboe.

Less Volatility and Better Organisation

Many cryptocurrencies like Bitcoin, is prone to the wild price swings. Therefore, the spot trading does come with the added hazard of realizing dramatic losses if the price trajectory follows an unfavorable path. Now, the majority of crypto experts believes that BTC futures contracts offer a way to get an asset without the issue of Volatility.

Cash Settled futures possess Insignificant Impact on Bitcoin

Despite the popularity in the market, trading in BTC futures yet not constitute a problem for the asset price. Moreover, many analysts have pointed to the introduction of the CME and Cboe BTC futures trading as a reason for the BTC price slide.

Why is CME a Huge Deal for Bitcoin?

CME Group might not be a household name. However, this organization is legitimately the world’s largest futures derivatives exchange.

Ultimately, it’s a significant organization with enormous rules over the global financial industry.

Furthermore, by creating a functioning derivative’s market, the CME group helps professional traders and investors access the volatility of Bitcoin without trading on unfamiliar exchanges.

The investors can get the publicity to BTC without the downsides.

“Terrence Duffy, the CEO of CME’s,” said that CME Group is the natural home for this new vehicle that provides investors more transparency, price discovery as well as risk transfer capabilities.

This will ultimately open the door to institutional investors. Today, there are only a few institutional investors who provide exposure to bitcoin.

It’s important to know that CME Group isn’t the first company to offer Bitcoin derivative’s: both CME, as well as Cboe, lost o startup LedgerX, which won CFTC approval to offer bitcoin swaps and options and began trading.

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