CME Bitcoin Futures and the Bitcoin Price Hike
CME Group is the largest option exchange in global finance sector, but we’re sure you already knew that. If you didn’t know, now you do. Speaking of important things, there was buzz in the last few months that they were coming up with bitcoin futures instruments and were in the process of sorting out the required approvals and getting some of the leg-work done. They had said that these instruments would be out, sometime in December.
CME Group Has Announced the Date of the Futures
Well, it’s official now. CME Group has finally announced the date of the official launch of the bitcoin futures trading platform. It’s December the 10th, 2017. Analysts were predicting the price of bitcoin to skyrocket to over the $10,000 mark around the time of the launch, and they weren’t wrong. The bitcoin has been on a roller coaster in the past week, going upwards of $8,000, then $9,000 and finally crossing the $10,000 mark onto $11,000, suffering corrections in the process, dropping to $9,000 again. It looks like it’s nearing $11,000 again as its price at the time of writing was at $10,988.
At the beginning of November, many top financial analysts including Mike Novogratz and Max Keiser, were predicting the price of bitcoin to go to $10,000 in the short-term when it was hovering between $6,000 and $8,000. Seems unlikely to the untrained eye, but it all happened in the past week.
LedgerX: The Bitcoin Exchange Announced its Bitcoin Options Contract in The Third Week of November
Ledger X is the US bitcoin derivatives, options and futures exchange that is approved by the CFTC (Commodities and Futures Trading Commission). They processed their first bitcoin options contract in mid-Novermber. The contract entailed that the buyer pegs the contract at $10,000 meaning that profit would only occur if the price of bitcoin crosses the $10,000 mark by December 28th. Needless to say, it did. These announcements probably fueled the bitcoin prices to achieve the results quicker.
Only institutional investors use the futures and options exchanges that are operated by Ledger X, CME Group and CBOE. Even then, they cannot invest in bitcoin directly. Most options contracts in bitcoin are therefore made by large retail investors who have a strong conviction that bitcoin has the potential to make gains. It is their resilience that helps them achieve these “ridiculous” gains.
Paul Chou, CEO of LedgerX, said that he expects that there will be more trades in the futures. He also says that this first options contract has given an indication of how bitcoin is likely to behave in the future (2018) based on how the institutional traders reacted to this first option.
Hedge Funds and Bitcoins
The market is now extremely confident in short and mid-term future of bitcoin because they are seeing the results, there are around 100 hedge funds that were created in the last year that only trade bitcoins and other digital currencies. More traditional institutional investors are starting to develop their taste for bitcoins and other digital assets. This is obviously fueled by some of the world’s biggest hedgefunds announcing their plans to invest in bitcoin when the CME bitcoin futures are launched on December the 10th.
We hope you’re looking forward to the developments that are likely to happen in this month as well as in 2018.
Remember, with bitcoin and cryptocurrencies, we’re in the first inning. Perhaps 1% of Americans own any at all. Crypto today is where cellphones were in 1992. But adoption is growing fast. Get on the train!