CBOE Zooms Past CME In The Rally To Become The First Ever Bitcoin Future Trading Platform
Weeks back when two of the biggest Derivative Exchanges in the world made a breakthrough announcement of launching Bitcoin futures starting year end, the price of Bitcoin increased by leaps and bounds. Chicago Mercantile Exchange gave a date of second week of the December, whereas its rival CBOE wished to bring upon the futures platform within the first half of 2018. However, CBOE took the cryptoworld by storm when they announced their plan of launching a Bitcoin futures trading platform dealing in Cryptocurrencies on Monday.
This helped CBOE leap ahead of CME in the marathon of being crowned as the first ever Bitcoin trading platform. The grand launch stipulated to take shape on Sunday, December 10 at 5pm which will provide investors with a new alternative to speculate in the booming new market.
Ed Tilly, the CEO and chairman of CBOE Global Markets, pointed out in a press release that, “Given the unprecedented interest in bitcoin, it’s vital we provide clients the trading tools to help them express their views and hedge their exposure.”
The Bitcoin futures trading shall be inaugurated in the CBOE Futures Exchange on 5 p.m. ET Sunday December 10th and the first full day of trading shall be marked by Monday, December 11th. The release also indicated that trading will not be chargeable during the month of December.
The successful launch of both these platforms was subject to approval by the Commodity Futures Trading Commission which was looking after the regulatory framework and implementation process for ensuring complete investor protection. CFTC revealed on Friday that it has shown a green signal for trading of Bitcoin futures to both the Chicago-based exchanges. The commission also said that a new contract has been self-certified by Cantor Exchange for bitcoin binary options.
The Bitcoin futures of CBOE shall be cash-settled against an auction price set by Gemini Trust which is a digital currency exchange founded by the famous Winklevoss twins, Cameron and Tyler. Such futures shall be traded under the ”XBT” ticker symbol. The bitcoin futures of CME on the other hand shall be cash-settled against an index which is presently weighted to four different bitcoin exchanges – GDAX, Bitstamp, Kraken and itBit.
Following months of debate regarding the legitimization of this dynamic digital currency, the launch of Bitcoin futures by such prominent exchanges shall surely serve as the first step towards the same. The journey of Bitcoin had been a highly eventful one starting from a time when it was only talked about in hush undertones by a cluster of tech entrepreneurs and was used rampantly to foster illegal and fraudulent activities in the online marketplaces.
As per analysts, institutional investors can make use of the Bitcoin futures to get a hold on the ever-evolving digital currency trend finally paving the path for a U.S. based exchange-traded fund. Bitcoin since the very beginning had been associated with tremendous volatility which can burden investors with losses amounting to several hundred dollars within a matter of hours. Market experts are however hopeful that once the bitcoin futures get launched, investors shall feel more comfortable in processing the bitcoin transactions since they can safeguard themselves from chance of losses by leaning on the bitcoin futures.
“The prospective introduction of bitcoin futures has the potential to elevate cryptocurrencies to an emerging asset class,” said JPMorgan global markets strategist Nikolaos Panigirtzoglou on Friday.
The price of Bitcoin hiked up by 1000% in the current fiscal to $11000 plus figures. This caused more and more institutional investors to get lured in to the crypto plethora with the hope to encash its mammoth growth surge. The trading volume in Bitcoin over a twenty four hours’ time frame has been revealed to be $6.6 billion.
Bitcoin off late is topping the list of the most desired commodity amongst investors. Nevertheless the inherent limitations associated with the same cannot be overlooked in its entirety. Rapid volatility in its price caused various experts to compare Bitcoin with a bubble which is just waiting to burst off. The probability of such a happening shall increase all the lot more if, government tries to regulate or crack down bitcoin trading.
The Commodity Futures Trading Commission revealed that it had undertaken discussions along with both CME and CBOE in regards to consumer protection from extreme price swings. Both exchanges are known to have agreed to “self-certification,” which refers to a pledge by stating that federal securities law shall not be broken at any cost by the new instruments. Bitcoin was created way back in 2009 by an anonymous person named Satoshi Nakamoto and wished to infiltrate the wallets of people worldwide as an alternative to government issued fiat currencies.
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Tarunima Ghosh Laha is a Finance Post Grad from St. Xaviers who believes Finance is more than just Balance Sheets and Ledger creation. This filmy bookworm who believes she was a sloth in past life also nourishes a penchant of owning a private zoo someday. Equipped with a laptop and online Lexicon she is all set to give finance a glamorous makeover in the form of exciting writeups with bang on info and flashy new words.
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