Second US Stock Exchange Launches Bitcoin-based Trading

20 December, 2017, 01:25 | Author: Manuel Hopkins
  • The CME bitcoin front-month futures contract opened at $20,650 but within half an hour had dropped by 6┬áper cent

The bitcoin futures on the CME track bitcoin prices from the Gemini private exchange.

Bitcoin fell back below $19,000 in the early hours of this morning after it came tantalisingly close to $20,000 yesterday - as the CME Group's new bitcoin futures contracts dropped.

Wall Street firms already trade on the big Chicago exchanges, and their bitcoin-tied derivatives are seen as a step toward bringing the digital asset into the financial mainstream. The contracts, which settle in dollars and trade on regulated exchanges, can be bought by institutional investors that are prohibited from buying bitcoin directly on largely unregulated exchanges.

"Until it becomes easier to sell short, buying dries up, or there are tech issues or a major hack, bitcoin will keep passing milestones with alarming regularity".

The CME and Cboe bitcoin futures have some distinct features.

Spot bitcoin eased 1.9 per cent on the Bitstamp exchange to US$18,650, after surging to a record high of US$19,666 on Sunday.

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For one, Eurex will likely need a more robust online platform as CBOE saw outages following its release on December 10.

At its launch in February 2009, a bitcoin cost just a few cents.

Large exchanges such as these have volatility protection in place, which means they will suspend trading if the contracts rise or fall 7% or 13%, and prices won't be allowed to move more than 20%.

The contract was last at $18,805, below the $19,500 reference price set by the exchange for the January contract. TD Ameritrade Holding Corp. said late Friday that it will offer Cboe's starting on Monday, though it'll wait to offer the CME contracts until they demonstrate sufficient liquidity. "We saw a nice open on light volume, but pretty uneventful so far", Mr Spen-cer Bogart, a partner at Blockchain Capital, said after trading began on Sunday. Option Clearing has a margin requirement of 44 percent to clear contracts at CBOE.

"I'm not totally convinced that this offers a clear enough link to enable people to play the short side and still reap the financial benefit at settlement", Jeremy Goldwyn, a managing director at Hong Kong-based commodities and financial futures brokerage Bands Financial Ltd., told Bloomberg.

Ally declined to provide more details on the subject at this time.

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