Bitcoin Surges To New Record High As CME Launches Bitcoin Futures In Q4

Tyler Durden's picture

As the mainstream continues to embrace cryptocurrencies - much to the chagrin of Jamie Dimon et al. in the establishment - CME Group is "responding to client interest" and launching a Bitcoin Futures contract in Q4.

CME Group says new contract will be cash-settled, based on the CME CF Bitcoin Reference Rate (BRR) which serves as a once-a-day reference rate of the U.S. dollar price of bitcoin.

This news has sent Bitcoin back up to record highs...

Full CME Statement:

CME Group, the world's leading and most diverse derivatives marketplace, today announced it intends to launch bitcoin futures in the fourth quarter of 2017, pending all relevant regulatory review periods.

The new contract will be cash-settled, based on the CME CF Bitcoin Reference Rate (BRR) which serves as a once-a-day reference rate of the U.S. dollar price of bitcoin.  Bitcoin futures will be listed on and subject to the rules of CME.

"Given increasing client interest in the evolving cryptocurrency markets, we have decided to introduce a bitcoin futures contract," said Terry Duffy, CME Group Chairman and Chief Executive Officer. 

 

"As the world's largest regulated FX marketplace, CME Group is the natural home for this new vehicle that will provide investors with transparency, price discovery and risk transfer capabilities."

Since November 2016, CME Group and Crypto Facilities Ltd. have calculated and published the BRR, which aggregates the trade flow of major bitcoin spot exchanges during a calculation window into the U.S. Dollar price of one bitcoin as of 4:00 p.m. London time. The BRR is designed around the IOSCO Principles for Financial Benchmarks. Bitstamp, GDAX, itBit and Kraken are the constituent exchanges that currently contribute the pricing data for calculating the BRR.

"We are excited to work with CME Group on this product and see the BRR used as the settlement mechanism of this important product," said Dr.Timo Schlaefer, CEO of Crypto Facilities.

 

"The BRR has proven to reliably and transparently reflect global bitcoin-dollar trading and has become the price reference of choice for financial institutions, trading firms and data providers worldwide."

CME Group and Crypto Facilities Ltd. also publish the CME CF Bitcoin Real Time Index (BRTI) to provide price transparency to the spot bitcoin market.  The BRTI combines global demand to buy and sell bitcoin into a consolidated order book and reflects the fair, instantaneous U.S. dollar price of bitcoin in a spot price. The BRTI is published in real time and is suitable for marking portfolios, executing intra-day bitcoin transactions and risk management.

Cryptocurrency market capitalization has grown in recent years to $172 billion, with bitcoin representing more than 54 percent of that total, or $94 billion.  The bitcoin spot market has also grown to trade roughly $1.5 billion in notional value each day.

*  *  *
As CoinTelegraph noted previously, mainstream exchange embrace of Bitcoin could lead to less volatility and further acceptance and new opportunities.

In what can be seen as a mainstream financial world’s embrace of Bitcoin, the Chicago Mercantile Exchange (CME Group) and Intercontinental Exchange Inc. (ICE) are all set to publish data on prices of Bitcoin. CME Group is likely to start publishing this data in the fourth quarter of 2016 while ICE, the owner of the New York Stock Exchange (NYSE) is considering if it should include data from various exchanges for a daily settlement price which it has been publishing since May of 2015.

Recently Dwijen Gandhi of ICE told Reuters that NYSE will soon launch a real-time pricing index which he said would provide additional transparency and insight into the Bitcoin price.

CME Group plans two new Bitcoin products

CME Group and ICE taking the Bitcoin dive is good news for the newly established ‘Digital Asset Class’. The participation of exchanges would allow investors and traders alike to easily acquire the information that they need to trade Bitcoin with more confidence.

According to a press release dated May 2, 2016, the CME group has said that they will collaborate with Crypto Facilities Ltd, a digital assets trading platform, and that they will be developing two new products which they plan to launch by Q4, 2016.

CME CF Bitcoin Reference Rate (BRR), which will provide a final settlement price in US dollars at 4 PM London Time on each trading day and the CME Bitcoin Real Time Index (RTI), which allows for real time access to Bitcoin prices.

Cointelegraph talked with Sandra Ro, Executive Director at CME Group about how these developments would affect Bitcoin prices and she says:

“There is no current bitcoin reference rate which is considered “standard” market convention. There are many real time indices but we believe our methodology, inclusion of only the most serious bitcoin exchange data, and focus on developing digital assets will add significant credibility to the nascent digital asset market.”

It is notable that RTI will be calculated by Crypto Facilities and will be calculated  based on global demand to buy and sell Bitcoin aggregated into a consolidated order book.

The Price of Bitcoin will be in US dollar terms and will be published once every second according to data made available by CME on the website.

NYSE Bitcoin index NYXBT

On the other hand, the New York Stock Exchange has already wet its feet in the Bitcoin pool by launching the NYSE Bitcoin Index (NYXBT). NYXBT is the first ever exchange-calculated and disseminated Bitcoin index according to ICE.

NYXBT uses a ‘unique methodology’ according to the ICE press release which relies on “rules-based logic to analyse a dataset of matched transactions and verify the integrity of the data to ultimately produce an objective and fair value for one Bitcoin in US Dollars at 4 pm London Time.”

NYXBT will at first take data from transactions from the Coinbase exchange. It is pertinent to mention here that NYSE had made a minority investment in Coinbase in 2015.

Thomas Farley, NYSE Group President, says:

“As a global index leader and administrator of ICE LIBOR, ICE Futures U.S. Dollar Index and many other notable benchmarks, we are pleased to bring transparency to this market. By combining our technology infrastructure with our expertise in index calculation and data management, we will continue to launch complementary products based on our rigorous standards and proprietary index methodology.”

Expect more mainstream participation and new products

It seems that the mainstream financial world is finally ready for Bitcoin. This could mean a new era in which Bitcoin could actually become THE digital asset class and could also lead to further delivery of new financial products for traders and investors.

Cointelegraph talked with Fran Strajnar, Founder and chief executive officer of BraveNewCoin (BNC), an institutional Digital Asset Data provider. Strajnar is excited about these new developments.

Strajnar says to CoinTelegraph:

“What Bitcoin and the entire Digital Asset Class needs to hit mainstream is not just consumer and application adoption but financial infrastructure and the adoption of quality market data services, by well established trading platforms.”

He added that BNC itself provides market data and indexing solutions.

As for opportunities for traders in the form of new products, he thinks that because Bitcoin is global, functions like nothing else and requires a global spot price.

Strajnar expects to see two things evolve from CME’s Bitcoin reference rollout in Q4:

  1. Creation of various Derivative products & further ETF potential, which will help with reducing volatility.
  2. A disparity between US Dollar denominated Bitcoin trading activity and other BTC trading pairs, seeing as the CME index only includes BTC/USD trading. A good arbitrage opportunity will come out of this.

 

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Buckaroo Banzai's picture

Expressing and/or publicizing the idea that white people shouldn't be wiped off the face of the earth gets you in hot water at Coinbase.

BetweenThe Coasts's picture

Were you ever able to fund your Gemini account via wire? Gemini was always on some "bad" list and wires were out.

tmosley's picture

I was able to wire them with no problem.

Suggest you open an account with a small, local bank if you haven't already. The big ones are the most likely to pull shit like that.

Buckaroo Banzai's picture

One of my wires did take 24 hours to go through, but the other wires I did to them went through within hours.

BetweenThe Coasts's picture

Sigh. Was blocked twice from different banks, must have been the particular State.

spqrusa's picture

Shorting (covered) is not the same as naked (uncovered) shorting. Nutter.

Raffie's picture

Web bot calling BTC to be $10k by years end.

ALSO there could be a pull back to $4k after BTC hits around the $6800 mark, before the surge to $10k. Something to think over.

Saucy-Jack's picture

Synthesized BTC is here.

Price discovery will be interesting...

esum's picture

IF justice WERE SERVED 

DIMON WOULD BE IN PRISON.......

 

MansaMusa's picture

I agree, Dimon and Buffet probably have a few 1,000 coins. Never trust these rats.  

Urban Roman's picture

Coming soon ... wait for it ... the TungstenCoin!

Just like Bitcoin but worthless.

RU4Au's picture

Well, we have to have some way to cap the price of dollar competitors, don't we?

Rainman's picture

Tell me again why BitCon is valued in fiat $$$ ...

aloha_snakbar's picture

Because without the dollar, Bitcon reverts to what it actually is... a gaming token wearing big boy pants...

Luc X. Ifer's picture

If the society doesn't collapse or get wiped by nuclear MAD you better have as many as possible of that 'gaming tokens' - yes, that's how the new socio economical ecosystem started to unravel to the smart guys, trough gaming and gaming virtual money. They said - if it is possible in a simulation of reality, why it wouldn't be worth a try in the reality and voila, the POC shows it works wonders.

Yellow_Snow's picture

Go buy some $6330 Bitcoin 'tokens' and go play Pac-man with em...

tmosley's picture

What do you want it to be valued in?

Like it or not, dollars are the dominant currency, and EVERYTHING, including GOLD is valued in terms of them.

But of course, you can value anything in terms of anything else, so long as there is liquidity. Which there is.

Luc X. Ifer's picture

It's goning to last for a time till the new eco system overtakes. The spastic colon pseudo thinking we see here it just show the true reason why the world is so fucked - what an insurmountable distance is between how naturally very intelligent and educated people think and the mediocre selfish bottom feeder manipulation skilled only creature does.

Yellow_Snow's picture

Noob, It is denominated in ALL currencies... Change it to whatever you want

Winston Churchill's picture

Which are all derivatives of USD fiat.

Circular reasoning, all it gets you is a view of your own arse.

kochevnik's picture

Bitcoin is valued in thousands of instruments

Blue Dog's picture

It can be valued in anything you want it valued in. You could sell Bitcoin and immediately buy gold or silver with it.

VD's picture

phase 2 for prospective crypt0-muppetz.

futures on ponzi-c0inz.

TeamDepends's picture

Bitcoin $10K by Christmas, and you will still be talking shit.  When will you stop, $100K?  $1M?

tmosley's picture

He will stop when the despair caused by his envy leads him to suicide.

Scrot's picture

They will never stop. Their small money is in gold--hidden in a shitty little safe in the basement. They are waiting on the apocolypse and watching BTC drive the price of their gold stack down and down and down. 

NugginFuts's picture

Well, shit. There's that launch pad to $50k. Guess what's his face isn't going to have to eat his dick after all. 

ParkAveFlasher's picture

They better boost it up to $50k, before the CME calls Chilton out of retirement.

konputa's picture

So this means that we'll see daily 8:30AM EST smack downs then, yeah?

Davidduke2000's picture

welcome to the paper fraud, count on bitcoin to srop to $5

VD's picture

when 51% of nodes are no longer trustworthy, count on btc $0.00

tmosley's picture

Go all in short, then.

VD's picture

"

Tether is a Crypto version of the U.S. Dollar that is supposed to be backed by real U.S. dollars, but in reality NIA has inside knowledge that it is a complete fraud with no U.S. Dollar backing. It is the printing of fake Tether tokens that has fueled Bitcoin’s entire 2017 rise in price. With today’s latest printing of $25 million in new USDT tokens, NIA decided that it was too risky to remain short on Bitcoin at this time. Every time that USDT gets printed, we know that Bitcoin will rally afterwards – as these counterfeit Crypto U.S. dollars get lended out on margin to be used for wash trade manipulation.

Tether was created by a Cryptocurrency exchange that became insolvent, blaming it on a hacking theft of Bitcoin worth about as much as the inflation adjusted value of the largest bank robbery in U.S. history  (in Crypto land nobody ever admits to insolvency due to incompetence or criminality). Afterwards, this Bitcoin exchange was kicked out of the global banking system, and began printing hundreds of millions of USDT to repay its creditors – without possibly having access to the actual USD needed to back them.

Eventually when investors realize there are no dollars backing these tokens – it will cause the price of Bitcoin to collapse. NIA is currently producing a documentary about this upcoming time bomb."

 

http://inflation.us/nia-covers-bitcoin-short-and-buys-bitcoin-cash-after...

Yellow_Snow's picture

You just keep on believing that... and keep on getting 'bitch slapped' by Bitcoin

 

tmosley's picture

Gotta love the baseless allegations of the peanutz.

Go all in short! Put your lack of money where your loud mouths are!

vega113's picture

You only forgot that Bitcoin casually corrects 50% or more. You can't trade something on margin that is so volatile. Also, please note that Bitcoin is traded on hundreds if not thousands of exchanges, if someone would really print that much USDT without backing - a panic would occur and the exchange will get bankrupt - as there is no Central Bank to provide liquidity. And there's no Central Bankers with forward guidance to calm down people - in fact just the opposite - central bankers hate Bitcoin and claim it is a fraud to anyone ready to listen.
Also, you analysis doesn't not include anything positive - like the increase in the BTC transactions and volume - which actually explains most of the Bitcoin rise.

Spaced Out's picture

Don't waste your breath, SHORT IT!

Scrot's picture

Absurd. Very few people in the crypto space use or even know about tether. Most exchanged don't even list it... has nothing to do with the price of bitcoin.

spqrusa's picture

USDT aka Tether is a regulated money transmitter. Nutter.

buzzsaw99's picture

those maggots invited themselves to the party?  who put them in charge?

Yellow_Snow's picture

It won't work...  The Central Banks don't own Bitcoin.  Whereas with gold Central Banks are the biggest holders...

Bam_Man's picture

CME futures = a hyper-active monkey with a hammer, aimed at bitcoin.

BetweenThe Coasts's picture

Oh boy FUTURES!

Now they can supress Bitcoin just like Gold.

buzzsaw99's picture

exactly.  now they can sell ten billion bitcoin without owning a single one.

tmosley's picture

Nope. Futures have been available for years. Any exchange that allows NAKED shorting will find that its data is not considered when calculating the price.

Scrot's picture

Gold would be $300 an ounce without futures and without shorts to stablize dips, it would fluctuate so wildly that no one would touch it.

Yellow_Snow's picture

10K by Christmas   :)

LawsofPhysics's picture

Buy now or be priced out forever!!!

LOL!

"Full Faith and credit"

Same as it ever was...