Countdown To Bitcoin’s Future, CME To Launch BTC Futures

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Bitcoin futures and options on futures

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In response to growing interest in cryptocurrencies and customer demand for tools to manage bitcoin exposure, CME options on Bitcoin futures (BTC) are now trading.

The value of options on Bitcoin futures is based on the regulated CME CF Bitcoin Reference Rate (BRR) and settles into actively traded Bitcoin futures. Read the FAQ on our Bitcoin options. Watch the videos to learn more on how our Bitcoin contracts work and how they can be used.

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CME Open Interest for Bitcoin Futures Up 100% Since Start of 2020

Omkar Godbole

CME Open Interest for Bitcoin Futures Up 100% Since Start of 2020

Open interest in bitcoin futures listed on the Chicago Mercantile Exchange (CME) have doubled in the first few days of the year, as noted by data analytics firm Skew.

About $235 million worth of positions (5,329 contracts) were open on the CME on Jan. 17 compared to $110 million seen in early December. Open interest is the sum of all contracts that have not expired, been exercised or physically delivered.

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Open Interest for CME Bitcoin Futures Source: Skew

Open interest has spiked alongside price, confirming an upward trend. Bitcoin bottomed out near $6,430 in mid-December and rose to a 2.5-month high of $9,188 on Sunday. At press time, the cryptocurrency changed hands at $8,600, representing a 20 percent gain on a year-to-date basis.

Increased activity ahead of options launch

The bitcoin futures market witnessed increased activity in the runup to the launch of options trading. Open interest rose to more than 5,000 contracts in the first four trading days of the week.

Further, more than 17,000 contracts (equivalent to over 85,000 bitcoin) traded on Jan. 8 – five days before the options product went live and registered a first-day volume of $2.3 million, or 55 options contracts.

Options trading volume more than doubled to 122 contracts on Friday, amounting to a notional volume of 610 BTC, or $5.3 million, as each contract represents five bitcoins.

Institutional participation

“BTC has seen remarkable growth in volume and customer interest with nearly 2.5M contracts traded to date and 4.9K+ contracts traded daily, “ the CME tweeted on Dec. 17.

Further, nearly 6,400 futures contracts traded each day (equal to 31,850 bitcoin) at the exchange in 2020.

The ever-increasing numbers at the CME may reflect rising institutional interest in the cryptocurrency and could accelerate bitcoin’s evolution as a mature asset class.

“CME’s product has evolved over the last two years and is now one of the most liquid, listed bitcoin derivatives globally. We have seen strong participation from institutional investors, physical bitcoin traders and other clients who value the transparency, price discovery and risk transfer that only a regulated marketplace like CME Group can offer,” Tim McCourt, managing director at CME Group, wrote in a LinkedIn post in December.

Other exchanges also witnessed increased activity over the last few months. Total trading volume rose in futures listed across the globe to well above $25 billion on Jan. 14, according to Skew. That was the busiest day since Oct. 26.

Read more about.

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Cboe, CME to launch bitcoin futures contracts

(Reuters) – Cboe Global Markets Inc CBOE.O and CME Group Inc ( CME.O ) will launch futures contracts on bitcoin on Dec. 10 and Dec. 17 respectively.

Here are some of the differences between the products to be offered by the exchange operators.

CONTRACT UNIT

-The Cboe Bitcoin Futures Contract will use the ticker XBT and will equal one bitcoin.

-The CME Bitcoin Futures Contract will use the ticker BTC and will equal five bitcoins.

PRICING AND SETTLEMENT

-Both Cboe’s and CME’s bitcoin futures contracts will be settled in U.S. dollars, allowing exposure to the bitcoin without actually having to hold any of the cryptocurrency.

-Cboe’s contract will be priced off of a single auction at 4 p.m. Eastern time (2100 GMT) on the final settlement date on the Gemini cryptocurrency exchange.

-CME’s contract will be priced off of the CME Bitcoin Reference Rate, an index that references pricing data from cryptocurrency exchanges, currently made up of Bitstamp, GDAX, itBit and Kraken.

TRADING HOURS

-Cboe’s XBT contract will trade on CFE, with regular trading hours of 9:30 a.m. to 4:15 p.m. Eastern time on Mondays and 9:30 a.m. to 4:15 p.m Tuesday through Friday. Extended hours will be 6 p.m. Sunday to 9:30 a.m. Monday, and 4:30 p.m. Monday through to 9:30 a.m. Friday.

-CME’s BTC will trade on CME Globex and CME ClearPort Sunday to Friday from 6 p.m. – 5 p.m. Eastern time with a one-hour break each day beginning at 5 p.m.

MARGIN RATE AND CLEARING

-Cboe’s contract will clear through the Options Clearing Corporation and a 30 percent margin rate will apply.

-CME’s contract will clear through CME ClearPort and will have a 35 percent initial margin rate.

CONTRACT EXPIRATIONS

-Cboe said it may list up to four weekly contracts, three near-term serial months, and three months on the March quarterly cycle.

-CME said it will list monthly contracts for the nearest two months in the March quarterly cycle (March, June, Sept., Dec.) plus the nearest two serial months not in the March quarterly cycle.

PRICE LIMITS AND TRADING HALTS

-Cboe will halt trading in its contract for 2 minutes if the best bid in the XBT futures contract closest to expiration is 10 percent or more above or below the daily settlement price of that contract on the prior business day.

Once trading resumes, if the best bid in the XBT futures contract closest to expiration is 20 percent or more above or below the daily settlement price of that contract on the prior business day, the futures will be halted for 5 minutes.

-CME will apply price limits, also known as circuit breakers, to its bitcoin futures of 7 percent, 13 percent, and 20 percent to the futures fixing price. Trading will not be allowed outside of the 20 percent price limit.

Sources: Cboe and CME

Reporting by John McCrank in New York; Editing by Lisa Shumaker

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