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CME will enter forward contracts on Bitcoin

CME will enter forward contracts on Bitcoin

created Paweł MosionekNovember 2 2017

Futures contracts on Bitcoin

CME Group (Chicago Mercantile Exchange & Chicago Board of Trade), i.e. the largest futures exchange in the world, has announced that it plans to introduce futures for the most popular cryptocurrency - Bitcoin. The date of launching the listing of new contracts is not yet known.

Contracts for cryptocurrencies

The CME Group mentions its plans to introduce instruments based on cryptocurrencies later this year, however, it all depends on the pace at which the requirements of market regulators will be met. The contracts themselves are to be offered without "physical" delivery. This means that when the series expires, the owner of the series will not be able to receive the cryptocurrency in "physical" form (it will not become the owner of bitcoin).

Futures contracts quoted on CME are to be settled on the basis of the so-called reference Bitcoin course (Bitcoin Reference Rate - BRR), which is calculated from November 2016 by CME and the Crypto Facilities trading platform. BRR includes quotes from the most important BTC exchanges in the world, ie Bitstamp, itBid, Kraken and GDAX.

CME also publishes the BTC price index under the name Bitcoin Real Time Index (BRTI), which is created on the basis of order sheets from the above-mentioned exchanges. It aims to show the "real market" rate of bitcoin.

Bitcoin fashion?

The cryptocurrency market capitalization is currently estimated at about $ 192 billion and is growing dynamically. In just 7 weeks, the value of this market has soared by less than $ 50 billion. Bitcoin itself has as much as 54% of shares, and the daily turnover is estimated at $ 1,5 billion. BTC quotes today exceeded the valuation level $ 7000 reaching a historic record ($ 7340) and at the same time increasing its value by 28% in just 7 days.

Spectacular increases in BTC may to some extent stem from the CME message. This is a sign of uninterrupted fashion on Bitcoin, and the emergence of futures contracts for these instruments will not only support it, but it can further drive it.

Looking at the pace at which the situation on the market of "virtual currencies" is developing, no one should be surprised by the strongly growing interest in them, both from traders and intermediaries, even such famous brands as CME or CBOE (which also plans to start trading cryptocurrencies from 2018).

However, the question always arises: Are we dealing with a speculative bubble whose time is coming to an end?

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About the Author
Paweł Mosionek
An active trader on the Forex market since 2006. Editor of the Forex Nawigator portal and editor-in-chief and co-creator of the website. Speaker at the "Focus on Forex" conference at the Warsaw School of Economics, "NetVision" at the Gdańsk University of Technology and "Financial Intelligence" at the University of Gdańsk. Twice winner of "Junior Trader" - investment game for students organized by DM XTB. Addicted to travel, motorbikes and parachuting.