Last year, legacy exchange CME group provided a bitcoin price index with the intent of adding bitcoin futures. However, they decided not to follow through with those plans.
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Bryan Durkin, who heads Chicago-based CME, told Bloomberg they were not going to list bitcoin futures. He mentioned the technology is nascent, and that digitization technology is on their radar. He further stated, “I really don’t see us going forward with a futures contract in the very near future.” However, some investors want exposure to bitcoin. There is a market for indirect exposure via futures contracts.
Bitcoin Futures Contracts
Though CME will not provide futures pairings to its clients, some of their competitors are entering the futures markets. Chicago, CBOE Holdings Inc., is slated to add futures contracting for bitcoin to their platform. They plan on implementing futures contracts in the fourth quarter of next year, according to the Bloomberg article. CBOE formed an alliance with the Winklevoss venture Gemini Trust Co in order to bring clients these bitcoin future options.
Outside of the United States, other companies have tried their hands at offering bitcoin futures. Straits, a Singapore based company, introduced futures trading last year. Straits partnered with Bitpay to make the transition seamless. Jamie Redman, writing for news.Bitcoin.com, covered this story:
Singapore-based Straits Financial offers a multitude of trading vehicles, such as commodity futures, OTC markets, and derivatives…Straits Financial says that Singapore has firmly established itself as Asia’s international financial hub. The company says it aspires to keep the country’s role in finance flourishing. By collaborating with BitPay, the brokerage house will give its clientele access to certain markets using Bitcoin.
The growing introduction of futures markets signifies that investors and traders want more exposure to bitcoin on legacy financial exchanges.
Exposure to Bitcoin and Bitcoin Growth
Ed Tilly, CBOE’s chairman and CEO, emphasized investor demand as the catalyst for the introduction of futures markes. He said in a comment that people want exposure and
contact with bitcoin. However, investors still seem hesitant to directly hold bitcoin. Instead, they prefer hedging against any perceived volatility with contractual arrangements.
Still, more and more traders are embracing bitcoin head on, with the price recently breaking the $4,000 barrier once again. This means that many investors still enjoy holding and trading bitcoin of their own. Nonetheless, it will be interesting to see how many more legacy financial exchanges draft futures contracts for their clientele as bitcoin adoption increases.
Do you think bitcoin futures contracts are good or bad for the ecosystem? Should people have futures contracts with bitcoin or just direct exposure? Let us know what you think in the comments below.
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