CME's Bitcoin Futures Contract Opens Above $20,000
The long-awaited Bitcoin Futures Contracts by CME Group went live today opening up the account at a price above $20,000 per one contract. However, just within half an hour of the launch, the Bitcoin futures contract slipped considerably going to a low of $18,345 as per the data on CME website. This is a bit of lukewarm performance in comparison to CBOE’s futures contract which saw a 19% surge on the very first day of trading.
The Bitcoin price has already factored the euphoria surrounding the arrival CME’s futures contract as the price of the cryptocurrency surged by $2000 in just past four days taking it to an all-time high around $19,900 as per our data.
“We saw a nice open on light volume, but pretty uneventful so far. I do think we could certainly pick up in volume as Asia begins to open. 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,” said Spencer Bogart, a partner at Blockchain Capital LLC, just moments after trading began on Sunday.
At the press time, the data on CME’s website show that 728 volumes have been traded for Jan 2018 contracts, one for the Feb 2018 contract, two for the March 2018 contract and four scheduled to expire on June 2018.
However, one interesting fact as noted Bobby Cho, head trader at major bitcoin trading company Cumberland is that the CME’s futures contract is trading very close to the actual Bitcoin price. Cho further stated "There's more people who are involved in the CME launch than there were at Cboe’s. The spot market still dictates where futures are trading, just because of the sheer volume."
One important difference between CBOE’s and CME’s contract is that CBOE contract size represents one Bitcoin while that of CME is five Bitcoins. CBOE uses Bitcoin price data from only one exchange - Gemini - while CME uses BRR (Bitcoin Reference Rate) derived from the price data available from four different exchanges.
As a result, many analysts say that CME futures contract can draw more volume in comparison to CBOE. Matt Osborne, chief investment officer of Altegris said “The CME contract is based on a broader array of exchanges. 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.”
Shane Chanel, a fund manager at ASR Wealth Advisers in Melbourne said “The launch should increase buy side pressure and potentially be the catalyst that pushes bitcoin above $20,000. The introduction by CME and CBOE has added validity acknowledging bitcoin as a legitimate asset.”
The arrival of Bitcoin futures contract has caused institutional investors to derive more investment products and everyone is currently eyeing on exchange-traded-funds (ETF).