CME launches bitcoin futures as the price trades close to 20,000 dollars

Dec 18, 2017, 2:00 PM · by Nathan Reeves

The world's largest futures exchange began offering bitcoin contracts a week after Cboe, bringing the asset further into regulated markets during a steep rally.

CME Group began trading bitcoin futures on Sunday evening, US time, following the launch of similar contracts on Cboe a week earlier. The start came as bitcoin traded near 20,000 dollars, after a rise of well over tenfold since the beginning of the year.

The contracts are cash-settled, meaning buyers and sellers never exchange actual bitcoin. Settlement is based on a reference rate drawn from several spot exchanges.

Supporters see the launch as a milestone. Futures give institutional investors a regulated way to gain exposure to bitcoin, and for the first time make it straightforward to bet on a falling price. Some analysts argue that the ability to short could make the market more balanced after a rally driven largely by retail buyers.

Others urged caution. Brokers have set high margin requirements, and some clearing firms have raised concerns about the risks of a product tied to an asset that can move 20 percent in a day.

The broader picture is one of rapid mainstream attention. Bitcoin is being discussed on television, at family dinners and in central bank speeches. Whether futures bring more stability or simply more speculation is a question the coming months will test.