Bitcoin derivatives makes smooth debut on CME

Bitcoin Continues To See Unprecedented Growth

New bitcoin futures were launched on Sunday night on the Chicago Mercantile Exchange (CME), making it the second largest stock market in the U.S. to speculate on virtual currency.

The CME Group began trading for bitcoin futures last night, and the beginning of the offering was not auspicious: prices opened at $20,650 and fell 3.8% during the evening to $18,760, before another small rise. Jose Nascimento, head cryptocurrency trader at Solidus Capital said: "We were waiting for the launch of the CME futures because the price is more robust and the exchange trades much larger volumes". And CME's futures were priced only about 2 percent higher than bitcoin itself; in the first day, Cboe's got as much as 13 percent above, a sign trading was relatively inefficient.

At the close of the first trading day on Monday, the CEM contract for delivery in January ended at $ 19,100, with 1088 contracts exchanged, a contract corresponding to five bitcoins.

Bitcoin futures are now available on the Chicago Mercantile Exchange (CME). The contracts may be bought by institutional investors who are not allowed to purchase bitcoin directly. The most active contract in the CME trading traded 221 times in the first hour of trading.

"The launch should increase buy side pressure and potentially be the catalyst that pushes bitcoin above $20,000", said Shane Chanel, a fund manager at ASR Wealth Advisers in Melbourne.

Giant CME exchange launches bitcoin futures to muted response
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The reference price, from which price limits are set, is US$19,600 for the February contract, US$19,700 for March and US$19,900 for June, according to CME. JB Mackenzie, . the managing director of futures trading at TD Ameritrade said: "We look at the volume, the open interest and the spreads, and we want to make sure that all those conditions are maturing properly".

Disclosure: CME Group is an investor in Digital Currency Group, CoinDesk's parent company.

"The introduction by CME and CBOE has added validity acknowledging bitcoin as a legitimate asset". The margin for an S&P 500 futures contract, by contrast, is 5 per cent, analysts said. With futures, "you don't hold the physical bitcoin, which solves custody issues and counterparty risks with these less-regulated exchanges".

The margin requirement at CME is 35 per cent, while at Cboe, it is 40 per cent, reflecting bitcoin's volatility.

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