Key Takeaways
- • CME, the world's largest futures exchange, launched its own bitcoin futures contract on Sunday, December 17, 2017, under the ticker "BTC," with the most popular January-expiring contract settling 2.05 percent lower at $19,100 on Monday after opening at $20,650.
- • Trading was far less volatile than Cboe's bitcoin futures debut a week earlier, which surged 19 percent on its first day; Cboe's contract settled 5.25 percent higher at $19,055 on Monday.
- • CME's contract represents five bitcoins, versus one bitcoin for Cboe's, and settles against its own reference rate tracking several exchanges, while Cboe uses a Gemini daily auction price.
- • Early volume showed CME at about 1,049 contracts (5,245 bitcoins) versus Cboe's roughly 3,860 one-bitcoin contracts, with analysts attributing CME's edge to its established futures reputation and greater institutional participation.
- • Spot bitcoin fell about 2 percent to $18,718 per the CoinDesk Bitcoin Price Index, and analysts note the spot market still dictates futures pricing.
Summary
CME, the world's largest futures exchange, launched its own bitcoin futures contract on Sunday under the ticker "BTC." According to CNBC, the most popular contract, expiring in January, settled 2.05 percent lower on Monday at $19,100. The product opened at $20,650 and initially traded higher before pulling back. Intraday, the futures fell more than 4 percent to $18,665 about two hours after opening, per the publisher's reporting.
The launch followed Cboe Global Markets' bitcoin futures debut a week earlier, when the Cboe contract, traded under "XBT," surged 19 percent on its first day. By comparison, the Cboe contract settled 5.25 percent higher at $19,055 on Monday. Joe Van Hecke, founder and managing partner at Chicago-based trading firm Grace Hall, said the market had anticipated a similar move and that the aggressiveness of bids surprised him. He noted that institutional-level investors appear to be trading the CME contract more heavily.
Structural differences distinguish the two products. A Cboe contract represents one bitcoin, while a CME contract represents five. Cboe settles against a daily price auction from Gemini, whereas CME uses its own bitcoin reference rate tracking several cryptocurrency exchanges. As of late Monday afternoon, CME trading volume was slightly higher than Cboe's: about 1,049 January contracts, equivalent to 5,245 bitcoins, compared with roughly 3,860 Cboe contracts representing one bitcoin each. Tom Lehrkinder, senior analyst at Tabb Group, said CME's familiarity in futures may have provided comfort to traders.
Spot prices were weaker. Bitcoin fell about 2 percent to $18,718, according to the CoinDesk Bitcoin Price Index, which tracks Bitstamp, Coinbase, itBit and Bitfinex. Bobby Cho, head trader at Cumberland, a DRW subsidiary, said CME futures traded closer to the spot price than Cboe's contract had at its launch. He added that the spot market still dictates where futures trade, given its volume.
The launches come as bitcoin has risen more than 1,600 percent this year. Nasdaq and Cantor Fitzgerald also plan bitcoin derivatives contracts. TD Ameritrade allowed certain qualified clients to trade Cboe bitcoin futures, including shorting, but not CME futures, as of Monday. Analysts see the products as a step toward legitimizing bitcoin as an asset class and a possible path to a bitcoin exchange-traded fund. According to financial research firm Autonomous Next, more than 170 cryptofunds have launched to invest in cryptocurrencies and blockchain start-ups.
The launch followed Cboe Global Markets' bitcoin futures debut a week earlier, when the Cboe contract, traded under "XBT," surged 19 percent on its first day. By comparison, the Cboe contract settled 5.25 percent higher at $19,055 on Monday. Joe Van Hecke, founder and managing partner at Chicago-based trading firm Grace Hall, said the market had anticipated a similar move and that the aggressiveness of bids surprised him. He noted that institutional-level investors appear to be trading the CME contract more heavily.
Structural differences distinguish the two products. A Cboe contract represents one bitcoin, while a CME contract represents five. Cboe settles against a daily price auction from Gemini, whereas CME uses its own bitcoin reference rate tracking several cryptocurrency exchanges. As of late Monday afternoon, CME trading volume was slightly higher than Cboe's: about 1,049 January contracts, equivalent to 5,245 bitcoins, compared with roughly 3,860 Cboe contracts representing one bitcoin each. Tom Lehrkinder, senior analyst at Tabb Group, said CME's familiarity in futures may have provided comfort to traders.
Spot prices were weaker. Bitcoin fell about 2 percent to $18,718, according to the CoinDesk Bitcoin Price Index, which tracks Bitstamp, Coinbase, itBit and Bitfinex. Bobby Cho, head trader at Cumberland, a DRW subsidiary, said CME futures traded closer to the spot price than Cboe's contract had at its launch. He added that the spot market still dictates where futures trade, given its volume.
The launches come as bitcoin has risen more than 1,600 percent this year. Nasdaq and Cantor Fitzgerald also plan bitcoin derivatives contracts. TD Ameritrade allowed certain qualified clients to trade Cboe bitcoin futures, including shorting, but not CME futures, as of Monday. Analysts see the products as a step toward legitimizing bitcoin as an asset class and a possible path to a bitcoin exchange-traded fund. According to financial research firm Autonomous Next, more than 170 cryptofunds have launched to invest in cryptocurrencies and blockchain start-ups.
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