Bitcoin is currently trading at $6,415. The cryptocurrency market capitalization has grown to $172 billion, with Bitcoin representing more than 54% or $94 billion. CME Group acknowledged that the Bitcoin spot market has also grown to trade roughly $1.5 billion in notional value each day.
The Bitcoin futures contract will be cash-settled and based on the CME CF Bitcoin Reference Rate (BRR). For more information on this product, please click here.
"Given increasing client interest in the evolving cryptocurrency markets, we have decided to introduce a Bitcoin futures contract," said CME Group Chairman and CEO Terry Duffy. "As the world's largest regulated FX marketplace, CME Group is the natural home for this new vehicle that will provide investors with transparency, price discovery and risk transfer capabilities."
Crypto Facilities will be working on this product with CME Group, and they will both also publish the CME CF Bitcoin Real Time Index (BRTI) to provide price transparency to the spot Bitcoin market.
"The BRR has proven to reliably and transparently reflect global Bitcoin-dollar trading and has become the price reference of choice for financial institutions, trading firms and data providers worldwide," said Dr.Timo Schlaefer, CEO of Crypto Facilities.
BRTI combines global demand to buy and sell Bitcoin into a consolidated order book and reflects the fair, instantaneous U.S. dollar price of bitcoin in a spot price. According the CME, the BRTI is published in real time and is suitable for marking portfolios, executing intra-day bitcoin transactions and handling risk management.
Implications for Bitcoin?
Coinsource CEO Sheffield Clark noted that Bitcoin is in a phenomenal position right now. "People sometimes overlook the fact that Bitcoin has been the highest performing currency four of the past five years, and its unprecedented growth in value has been something big money traders have wanted to get their hands on for a while," said Clark.
Clark highlighted that one of Bitcoin's few setbacks was accessibility to institutional money; now that's about to change. "I'm excited for the CME and for the rising digital currency asset class," he said.
DataWallet CEO and founder Serafin Lion Engel believes the CME Group announcement marks the official inflection point of Bitcoin crossing the chasm from being championed exclusively by tech-savvy early adopters to starting its proliferation among established financial institutions.
"While it was easy for critics to label early adopters' enthusiasm as foolish, the adoption of Bitcoin by institutions such as CME gives the cryptocurrency a seal of approval that will eradicate even the most well-reasoned criticism pundits may voice," added Engel. "This paves the way for Bitcoin living up to its full potential and soaring high into the five digits."
This move from the CME is, indeed, a clear indication that Bitcoin is now becoming a more "professional" investment.
"The launch of Bitcoin futures on CME is another signal of the ongoing professionalization of crypto-asset markets." said Tor Bair, head of growth and marketing for Enigma, a digital assets financial services developer.
He explains this move by the CME will bring new professional interest in cryptoasset investment and trading. "While providing new demand for cryptoassets, it also creates significant opportunities for data-driven investors and traders who stand to benefit from increased liquidity and volume," added Bair.
"We welcome the news from CME - the world's leading derivatives market place - of the launch of a professional Bitcoin based Futures marketplace by year-end," said Laurent Kssis, managing director of XBT Provider by CoinShares, the group behind the first Bitcoin and Ether exchange-traded note.
It's no secret that the futures Bitcoin exchange-traded fund (ETF) has been struggling in its application for approval by the Securities and Exchange Commission (SEC). This move could help grease the wheels for approval going forward.
"Regulators have consistently indicated that second layer 'fit for purpose' tools like these futures are critical to the proliferation of a Bitcoin ETF being approved in the U.S.," added Kssis. "This is fantastic news for investors interested in a Bitcoin ETF and for companies offering crypto-investment vehicles."
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