Technology 3 min read

Bitcoin is now Trading on CME Futures Exchange Market

Igor Batrakov |

Igor Batrakov |

Bitcoin has taken another step towards sealing its place on Wall Street as it made its debut in another futures exchange market.

A week after debuting on mainstream investment market through CBOE, the world’s largest futures exchange market, Chicago Mercantile Exchange, has launched its own Bitcoin Futures (BTC) on Sunday.

While CBOE’s XBT launch last week was received positively by investors, yesterday’s CME’s BTC was welcomed by a 3.8 percent decrease in futures trade value four hours after its launch. The futures’ value dropped to around $18,700 USD after opening at over $20,600 USD.

#BitcoinFutures contracts launched by Chicago's @CMEGroup on Sunday.Click To Tweet

However, the cryptocurrency has bounced back from the sudden drop and is now trading at around $19,200 USD. According to reports, CME’s futures exchange market has traded nearly $50 million Bitcoin futures while its current close rival, CBOE, hosted $30 million USD Bitcoin futures at the same time.

Two Competing Giant Futures Exchange Market

While the two Bitcoin futures contracts have close trade prices, the two have different stories to tell as they are using different bases from which to calculate the daily price change.

CBOE’s contract with January settlement date is valued at $18,920 USD per Bitcoin, a 4.5 percent increase from Friday’s trade value of $18,100 USD. On the other hand, CME’s contract has an equivalent value of $18,950, a 2.8 percent decrease in trade value from its $19,500 seed price.

The difference in trade values is due to CME’s usage of the trading information composite from four Bitcoin exchanges namely Bitstamp, GDAX, itBit, and Kraken. It should be remembered that CBOE only bases its Bitcoin price from Gemini Exchange‘s trading information. Aside from that, a CME futures contract represents five Bitcoins, while CBOE’s represents just one.

Many cryptocurrency experts believe that CME’s entry into the Bitcoin market will further attract the interest of people into investing in Bitcoin. Since multiple exchanges influence its contract price, it could potentially offer more transparency to investors.

“The CME [futures] contract is based on a broader array of exchanges,” says Matt Osborne, Chief Investment Officer of Altegris. “So there is a possibility that the CME contract may generate more interest and more volume.”

“Volumes are going to slowly increase as professional traders get comfortable with the price action and more importantly get comfortable with the volatility.”

Financial Experts Remain Skeptical of Bitcoin

Despite the digital currency’s successful trading in futures exchange markets, financial investors remain skeptical of Bitcoin. On Sunday, UBS bank Chairman, Axel Weber, joined other prominent Wall Street personalities in criticizing Bitcoin. In an interview, he was quoted as saying that “Bitcoin is not money.”

On a Swiss Sunday newspaper, Weber warned investors that they should resist jumping on the Bitcoin bandwagon. According to him, Bitcoin fails to fulfill the three functions of money and therefore should not be treated as such.

Weber pointed out that since real-life product prices are not written in Bitcoin, the digital currency could not be used as a good measure of value nor a means of payment. He also emphasized that Bitcoin is inherently unstable and not an efficient way to store value.

UBS strongly discourages its clients from investing in any virtual currency since the bank itself does not “consider it valuable and not sustainable.” While Weber believes that regulations should be put in place, many still think that regulating the cryptocurrency is far from happening because anonymity has always been a part of Bitcoin’s creation.

Now that Bitcoin has infiltrated the futures exchange market, will you invest? Let us know in the comment section below!

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Chelle is the Product Management Lead at INK. She's an experienced SEO professional as well as UX researcher and designer. She enjoys traveling and spending time anywhere near the sea with her family and friends.

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