CME Group to Launch Bitcoin Futures Contract on December 10

It seems that Christmas is all set to come early this year for Bitcoin investors. World’s largest derivatives marketplace - CME Group - has officially announced last month that it will soon be starting Bitcoin Futures contract by the end of this year. Now as per their website, the official date of launch has been locked on December 10 as the trading for the futures contract will begin the very next day on December 11.

The participation of such huge and renowned institutional investors bring a strong wave of optimism in Bitcoin market and will certainly result in more liquidity as more investors will participate in the Bitcoin Futures trading process. The good thing about the Bitcoin Futures Contracts is that they will be completely cash-settled, meaning it will allow traders to hedge cash positions in Bitcoins without actually owning them. All the Bitcoin Futures Contract will be settled based on the CME CF Bitcoin Reference Rate (BRR), which is once-a-day reference rate of the U.S. dollar price of Bitcoin.

The Bitcoin Reference Rate has been developed last year in November 2016 by CME Group and a UK-based Bitcoin futures exchange Crypto Facilities Ltd. CEO of Crypto Facilities, Dr. Timo Schlaefer said "We are excited to work with CME Group on this product and see the BRR used as the settlement mechanism of this important product. The BRR has proven to reliably and transparently reflect global bitcoin-dollar trading and has become the price reference of choice for financial institutions, trading firms and data providers worldwide."

Commenting on this major announcement, CME Group Chairman and CEO, Terry Duffy said “Given increasing client interest in the evolving cryptocurrency markets, we have decided to introduce a Bitcoin futures contract. As the world’s largest regulated FX marketplace, CME Group is the natural home for this new vehicle that will provide investors with transparency, price discovery and risk transfer capabilities.”

CME Group has now released the terms and specifications for the Bitcoin Futures Contracts on its official website . The specifications list certain rules for the settlement of the contract for e.g. Bitcoin will be traded in specific increments of $25 and will not witness a swing of more than 20% over its previous settlement price. This means CME wants to bring more stability in the prices of Bitcoins over the period of time thereby reducing the huge fluctuations and volatility as seen currently.

The announcement of Bitcoin Futures Contract by the CME Group has really contributed hugely to the recent rally in Bitcoin prices. The investor confidence has soared in manifold times and the Bitcoin prices have skyrocketed to above $8000 and are constantly inching to new highs.

Analysts say that once the option for Bitcoin derivates opens up, it will further open doors for exchange-traded-funds (ETFs) which can track the prices of Bitcoin futures.