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Exchange Giant CME Launches Bitcoin Futures Setting The Stage Bigger For The Cryptocurrency

Exchange Giant CME Launches Bitcoin Futures Setting The Stage Bigger For The Cryptocurrency
According to experts, there is more scope for further rally in bitcoin even after lukewarm reception was available after the launch of the bitcoin futures on the CME Group Inc on Sunday.
There was a drop of 6 percent in the CME bitcoin front-month futures contract even though it had open higher at $20,650. The exchange has set a January contract level of $19,500 as the reference price but the cryptocurrency was last at $18,805.
According to the CME, the June contract price is $19,900, for March it is $19,700 and for February it is set at $19,600.
There had been a rise of 20 per cent in the price of bitcoin after it’s futures trading was launched form the Chicago-based derivatives exchange Cboe Global Markets on Dec. 10.
It is estimated that big institutional investors would now take bitcoin seriously after it’s launch of futures and hence this development is being regarded as a major step in the cryptocurrency attaining legitimacy as a mode of payments.
“We saw a nice open on light volume, but pretty uneventful so far,” Spencer Bogart, partner at Blockchain Capital LLC, said shortly after trading began on Sunday.
“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.”
590 contracts was the volume on CME recently. During the full session on debut, it had almost 4,000 contracts.
Bitcoin was the first digital currency that had managed to secure and hide transactions using blockchain technology when it was first created in 2008 by either an individual or group that was called Satoshi Nakamoto. This hidden nature of the cryptocurrency has made it difficult for traditional regulators to implement any regulation on it.
Because of the fact that the ultimate settlement price is culled from multiple exchanges, therefore more institutional demand would be attracted by the CME bitcoin futures believe some investors.
“The launch should increase buy side pressure and potentially be the catalyst that pushes bitcoin above $20,000,” said Shane Chanel, a fund manager at ASR Wealth Advisers in Melbourne.
“The introduction by CME and CBOE has added validity acknowledging bitcoin as a legitimate asset.”
Cameron and Tyler Winklevoss are virtual currency entrepreneurs who own and rung the Gemini exchange from where the closing auction price of bitcoin is got from for the Cboe futures contract.
But the margin requirements for the contracts is reflective of the continued general sentiment of caution about the cryptocurrency in the market.
For every new contract, traders have to make an initial deposit into an account which is referred to as margin in the futures market.
The volatility of bitcoin is reflected by that margin money – which is 40 per cent in the Cboe and 35 per cent at the CME. In contrast, only 5 per cent is the margin requirement for an S&P 500 futures contract.

Christopher J. Mitchell

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