The CME group has now officially stated they will start testing the new Bitcoin Future next monday, november 20th. This exiting news led to another volatile crypto trading session.
Get ready to rumble on Cyber Monday! Bitcoin reached again $7.800 close to the previous highs we saw right after the cancellation of segwit2x. Prior to listing the Bitcoin as a real future contract the CME group stated that the cryptocurrency will have to go to the same regulatory process as all the other financial instruments before. Nonetheless Interactive Broker’s (IB) CEO Thomas Petterfy mentioned the risks associated with the new bitcoin future trading. According to the CME, the futures contract specifications are now available!
— CMEGroup (@CMEGroup) November 7, 2017
The largest problem
Compared to other assets tradeable with futures the underlying market for bitcoin is just virtual bits and bytes and they obviously cannot be delivered physically which is the actual intention of the futures trading market. Instead it settles on a cash basis. With several “bitcoin exchanges” worldwide there will be large possibilities for arbitrage business which means you could basically buy a cheap bitcoin in Europe and sell it for far more money on a Zimbabwe bitcoin exchange. According to Finance Magnats the CME group wants to determine the value of their bitcoin future by using their official CME CF Bitcoin Reference Rate. It is calculated by an aggregation of several bitcoin exchange feeds such as Bitstamp, GDAX, itBit and Kraken.
First step: regulation
By setting up a futures trading contract on the bitcoin the crypto currency goes through an important regulatory process which will be necessary for any serios financial instrument that needs to be standardized prior to going public. As the bitcoin market is heading for new highs, investors and traders seem to be happy with the cme announcement. What do you think, will bitcoin be the cryptocurrency of the future or another cryptocurrency? Drop your opinion in the comment field below!