Bitcoin derivatives makes smooth debut on CME


Bitcoin futures received a lukewarm reception at its launch on the CME Group Inc on Sunday, although market experts believe a recent rally in the cryptocurrency has further to go.

The CME Group began trading for bitcoin futures last night, and the beginning of the offering was not auspicious: prices opened at $20,650 and fell 3.8% during the evening to $18,760, before another small rise.

Since the opening, contracts have also notably continued trading at a premium against the price of bitcoin, which according to CoinDesk's Bitcoin Price Index (BPI) was $19,400 when CME launched trading of the bitcoin futures.

CME Group and Crypto Facilities will involve in the calculation and publication of BRR, which combines the trade flow of major Bitcoin spot exchanges during a calculation window into the US dollar price of one Bitcoin.

The contracts were priced only 2% higher than the actual Bitcoin price, which made trading them more effective than CBOE's, which were as much as 13% higher than the BTC price.

Bitcoin futures got underway at 10am AEDT on the Chicago-based CME exchange.

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The reference price, from which price limits are set, is US$19,600 for the February contract, US$19,700 for March and US$19,900 for June, according to CME.

Bitcoin futures are derived from the underlying value of Bitcoin, and allow traders to bet on what Bitcoin will be worth at a specified future date. However, this morning it opened at $19,086, and fell as low as $18,831, 1.3 per cent lower.

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. The contracts, which settle in dollars and trade on regulated exchanges, can be bought by institutional investors that are prohibited from buying bitcoin directly on largely unregulated exchanges.

"The introduction by CME and CBOE has added validity acknowledging bitcoin as a legitimate asset".

One futures trader said the average margin for brokers or intermediaries on bitcoin contracts was roughly twice the exchange margins. The margin for an S&P 500 futures contract, by contrast, is 5 per cent, analysts said. The margin requirement is 35 per cent at CME and 40 per cent at Cboe, reflecting bitcoin's volatility.