cme group bitcoin

Bitcoin Futures Details Released

The news article that arguably sent Bitcoin on its skyward surge three weeks ago has had an update this week. Both the Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE) have released details on upcoming futures contracts for the digital currency.

The proposed launches of Bitcoin trading contracts caused a price jump of over a thousand dollars per BTC at the beginning of this month. This has continued unabated seeing the crypto currency break record after record, the last being just above $8,200 on November 20.

According to reports, CME announced that its Bitcoin futures product would be available for trading in mid-December but in reality the actual date has yet to be confirmed. The exchange website currently states that futures contracts will be available before the end of the year pending all relevant regulatory review periods.

The details of the actual contracts were released and they will comprise of 5BTC with spot position limits set at 1000 contracts. The smallest price fluctuation, or tick, will be set at $5 for each Bitcoin in a contract, or $25 in total for the full five.

The CBOE released their contract details in a similar statement. Their contract will be a 1BTC (or XBT) with a tick of $10. They are also under regulatory review. Several expirations may be listed such as standard, or monthly, contracts listed to expire for three continuous months and farther out for months on the March expiration cycle (Mar, Jun, Sep, Dec).  There may also be up to four serial weekly expirations according to the CBOE blog.

Exchange CFA Russell Rhoads when on to comment:

“The question I am constantly hearing is, “How will the futures prices relate to spot Bitcoin pricing,” and the best (and most honest) answer I can give is, “I don’t know.”  I’ve done academic work on the launch of new listed products in the past and prior assumptions about new markets often are off the mark.  I’ve heard arguments for the futures trading at both a premium and a discount to the spot price, personally I think the best strategy is to see what the market tells us when Bitcoin futures are available for trading.”

This early adoption and institutionalization of Bitcoin by major financial exchanges will only strengthen is overall standing in a volatile crypto market. This has been clearly evident in prices this week which continue to set new highs.