CME Bitcoin Futures and Its Impact on Bitcoin Prices
Since the recent announcement by the Chicago Mercantile Exchange (CME) on the launch of Bitcoin Futures as a trading option, influential figures have been voicing their opinions, adding to the expectations. CME Bitcoin Futures are scheduled to take off in December 2017. The CME has released various statements, describing terms of trading and structure, in an attempt to keep Bitcoin Futures ‘safe’ to invest in.
CME Bitcoin Futures in the Eyes of Institutional Investors
While overall, investors seem to welcome CME Bitcoin Futures, the chairman of Interactive Brokers Thomas Peterffy thinks otherwise. Peterffy is an influential figure within the electronic brokerage firm and has publicly slanted the CME’s decision to launch Bitcoin Futures, highlighting it as a danger ‘destabilizing the organization itself’. While Peterffy has a moderately valid argument regarding the dangers of a certain financial products tied to Bitcoin Futures, the CME plans to set their own rules.
Tackling Volatility for Appeal: Millennials are an Ideal Market
Keeping a volatile product such as Bitcoin Futures on a leash will have an enormous impact on its appeal to the masses. In a recent interview, the CEO of the CME, Terry Duffy, has shared plans on how the organization plans to tackle Bitcoin’s extreme volatility in terms of product safety for their clientele. Moreover, according to the Financial Times, Duffy is aware Bitcoin is a completely different product that warrants certain measures to create a wider market appeal by supposed safety factors. Some of these include:
- BTC Futures will not trade 20% above or below the previous days’ price of settlement;
- Traders will be required to commit a 30% collateral in the event of a loss.
CME Bitcoin Futures Plan
While, the CME disclosed its plans to set some new rules for Bitcoin Futures – in a manner that seems unconventional – Peterffy’s warning continued circulating amongst young investors. This sparked further debate on the effect of the CME Bitcoin Futures on other regulated markets. After all, it can be quite awkward to trade an asset that cannot be regulated, on regulated markets.
Along with crafty margin plans and a boost in appeal, the CME is eyeing a new era of traders in terms of target market, specifically Millennials. These traders have cultivated a more flexible approach to investment and interest in cryptocurrency amongst young adults is on the rise. This has ignited interest from skeptics as well. In terms of client acquisition, CME Bitcoin Futures as a product is certainly proving to be controversial for those looking for a safe trade, while at the same time providing opportunities for bolder traders, who are more likely to understand the underlying asset.
How Will the Launch of CME Bitcoin Futures Affect Bitcoin Prices and Others?
Evidently, Bitcoin’s price surge has already shown its trickle-down effects. Companies such as Nvidia, one of the top global hardware manufacturers are enjoying the benefits without being directly exposed to bitcoin prices. Nvidia has experienced a surge of over 50%, pushing its stock above the $210 USD mark. The impact of Bitcoin Futures is far more unpredictable, however. CME Bitcoin Futures might have an unexpected impact on Bitcoin prices, just like Nvidia stock prices surged on unexpected sales pushed by bitcoin miners. Depending on the overall success of how traders will react to the CME Bitcoin Futures, the price of this digital asset can be in for a treat before the end of the year.
If we see a successful introduction of Bitcoin Futures, a bullish run can push BTC prices close to $10,000 USD. Rumors about forks and other adjustments like SegWit2X could have an exponential effect on Bitcoin Futures as well. According to popular exchanges such as Coinbase, possibilities of the hard fork are still open, making Bitcoin price predictions tougher to make. When a derivatives futures exchange accommodates a product based on BTC, it will have a market-wide impact. With Bitcoin being a one-of-a-kind product for CME, their teams must give their full attention to the launch in December.