Wall Street Launches Bitcoin Futures
Bitcoin is becoming more and more legitimate, good or bad.
The digital currency, which the head of JPMorgan Chase & Co. Jamie Dimon called the “scam,” could become the financial mainstream after CME Group Inc. reported that before the end of the year will start trading futures for Bitcoin. The decision of the largest exchange operator will increase interest in this virtual asset and ultimately lead it to a certain regulatory framework.
Just one month ago one of the leaders of the CME Group said that it was not waiting for the listing of bitcoin futures in the near future. CEO Terrence Duffy called one of the key reasons for the change in views of the accumulated client demand. Bitcoin rose to a record level after the release of this news on Tuesday, and since the beginning of the year soared by more than 550 percent.
“With the advent of a fully regulated market for derivatives, gateways will open for institutional demand,” said Spencer Bogart, head of research at Blockchain Capital, a venture capital firm. Bitcoin is attractive to Wall Street. “It’s volatile, traded 24 hours a day, seven days a week, and markets are inefficient and there are good opportunities for arbitrage,” he says.
Liquidity and hedges
At the moment, the LedgerX startup sells swaps and options for bitcoin, and Cboe Global Markets Inc. plans to launch futures contracts by the end of the year or early in 2018, when the permission of the US Commodity Futures Trading Commission will be received. The CME should also receive approval from the commission.
In the presence of futures contracts, investors will be easier to shorten bitcoin, that is, put on its fall. Liquidity will increase when high-frequency traders will act as market-makers, who are allowed to adhere to neutral strategies.