Bitcoin fell back below $19,000 in the early hours of this morning after it came tantalisingly close to $20,000 yesterday - as the CME Group's new bitcoin futures contracts dropped. TD Ameritrade announced late Friday afternoon it would allow certain clients to begin trading the Cboe bitcoin futures, but not the CME futures, on Monday.
The contracts were priced only 2% higher than the actual Bitcoin price, which made trading them more effective than CBOE's, which were as much as 13% higher than the BTC price. The new CME future traded above $20,000 but volume was lowly and the cash price soon slipped into negative territory.
The launch of bitcoin futures is viewed as a major step in the digital currency's path toward legitimacy, which should encourage the entry of big institutional investors. It was last at US$18,805, below the US$19,500 reference price set by the exchange for the January contract. The king of crypto inched up to just over $20k just before the trading doors were opened at CME. "Futures are a very positive development for the bitcoin market, as it will help everyone from miners to traders hedge risk, and having a price curve will help limit price swings". So in notional terms, 5125 Bitcoins traded at the CME today, compared to 3751 at the CBOE.
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"We were waiting for the launch of the CME futures because the price is more robust and the exchange trades much larger volumes", Jose Miguel Nascimento, head trader at cryptocurrency fund Solidus Capital, said in a telephone interview from Mexico City.
The general sentiment in the market remains one of caution, which is reflected in margin requirements for the contracts.
"One of the biggest issues when it comes to investing institutionally in digital assets is banks and larger institutions can't hold an unregulated instrument in their balance sheet, and a futures contract is something they can hold", said Gabor Gurbacs, director of digital-asset strategy at VanEck Associates Corp.
For more information about bitcoin futures, read Level Trading Field CEO Lanre Sarumi's three-part CoinDesk series exploring the topic. The bid-ask at the CME at both ranges from $20-$40.