CME Launches Bitcoin Futures

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On Sunday, bitcoin futures received a subdued welcome at its launch on the CME Group Inc even though market experts deem the recent rally in the cryptocurrency is far from over.

The CME bitcoin front-month futures contract opened higher at $20,650, but then fell 6 percent during the first half hour. The contract was last at $18,805, lower than its’s $19,500 reference price which was set by the exchange for the January contract. The reference price, from which price limits are set, is $19,600 for February, $19,700 for March and $19,900 for June, according to CME.

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On Dec. 10, the Chicago-based derivatives exchange Cboe Global Markets launched bitcoin futures and saw the price rise about 20 percent. The week-old bitcoin futures contract at the Cboe was last trading at $18,890, an increase of 4.3 percent.  Spot bitcoin dropped 1.9 percent on the Bitstamp exchange to $18,650, after hitting a record high of $19,666 on Sunday.

The launch of bitcoin futures is a big step for the digital currency toward legitimacy, which should inspire institutional investors to enter in positions.

“We saw a nice open on light volume, but pretty uneventful so far,” Spencer Bogart, partner at Blockchain Capital LLC. “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.”


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Volume on CME was recently at 590 contracts. On Cboe’s launch, nearly 4,000 contracts were traded.

Some investors imagine that the CME bitcoin futures may interest more institutional demand as the final settlement price is gathered from multiple exchanges rather than how the Cboe futures contract is established, by a closing auction price of bitcoin from the Gemini exchange

“The launch should increase buy side pressure and potentially be the catalyst that pushes bitcoin above $20,000,” said Shane Chanel, a fund manager.  “The introduction by CME and CBOE has added validity acknowledging bitcoin as a legitimate asset.”

The over-all outlook of the market remains one of concern which has been indicated in margin requirements for the contracts.

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