That's right, the bitcoin markets are about to change forever in about 3 weeks.
CME published an update on their website giving some specifics as to when futures might be launched.
The update can be seen here:
"Effective Sunday[,] 10 December 2017 for trade date Monday[,] 11 December 2017, and pending all relevant regulatory review periods, please be advised that CME will launch Bitcoin Futures."
This update comes on the heels of CME CEO Terry Duff stating last week that bitcoin futures products could be launched as early as the middle of December.
It turns out he was right.
The company confirmed his prediction with the updated posted on their website this morning.
Futures Products have been in the pipeline for some time now.
First it was LedgerX launching products for institutional clients:
https://steemit.com/derivatives/@jrcornel/it-s-official-regulated-derivatives-markets-are-here
Then it was the CME and CBOE saying how they hope to have futures products in the near future:
https://steemit.com/bitcoin/@jrcornel/bitcoin-making-new-all-time-highs-but-can-the-reasons-behind-it-also-be-good-for-steem-and-altcoins
https://steemit.com/bitcoin/@jrcornel/bitcoin-etfs-are-likely-on-the-way-says-cboe
It looks like the CME beat the CBOE to the punch. Though, both organizations say that they think futures products are going to ultimately open the door for ETFs.
Which in my opinion will be the real game changer.
How will these futures products be structured?
According to previously publised reports from CME, each contract will consist of 5 BTC.
Prices will be based on CME's existing bitcoin price indices.
CME has spend the better part of the last two months testing its CME CF Bitcoin Reference Rate. The index leverages price data from several global bitcoin exchanges located in Asia, Europe, and the United States.
Spot limits are set at 1,000 contracts.
Minimum price fluctuations are pegged at $5 worth of bitcoin, which represents a total of $25 for each one.
There are even some volatility ranges put in place to help guard against wild price swings.
Price fluctuation limits equal to 7% above or below prior settlement price and 13% above or below prior settlement price as well as a price limit of 20% above or below the previous settlement price will be in place.
Trading will not be permitted outside the 20% above or below prior settlement prices.
My thoughts:
If the above price range limits sounded like a different language to you, you are not alone.
The good news is that there will be some volatility limits on these products. After all the whole purpose of these things is to help large institutional investors better define their risk.
That is the whole reason they are interested in products like this in the first place.
Another advantage of using these types of products is that the fear of losing your bitcoin wallet, or the exchange holding your bitcoin getting hacked, completely goes out the window.
That risk gets transferred on to someone else, which is really a non trivial risk when dealing with these things.
Overall, I think these things finally coming online will be big for bitcoin and cryptocurrency adoption. It further identifies this as a legitimate asset class and represents the turning of a page in the life cycle of bitcoin and cryptocurrencies.
Stay informed my friends.
Sources:
https://www.coindesk.com/cmes-bitcoin-futures-likely-start-trading-december-11/
Image Sources:
https://www.worldcoinindex.com/news/cme-group-to-launch-bitcoin-futures-contract-on-december-10
http://mjreed.com/he-still-has-scars/
