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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0valueleft's picture

It only took 9 years, happy anniversery BTC, been a long strange trip.

aloha_snakbar's picture

The Birth of Bitcon

Two friends, Bob and Satosh are sitting around after an evening of consuming copious amounts of some especially wicked dank. Bob says to Satosh:

Hey Satosh... I have a genius idea

Yeah, what is it?

You know that app you coded...the one that churns out the useless SHA algorithms?

Yeah?

LOL...lets sell them as digital currencies!

Dude...you are fucking wasted, here, have another bong

No, seriously. We get that graphic artist you know create a slick image of a 'gold' coin, and then we can further confuse the rubes by telling them their 'coins' have to be "mined", as if they were real, physical metals!

Dude... you are insane! What kind of moron would buy something like that?

Bob: Oh... I dont know. Remember that now worthless token you paid stupid money for on WoW?

They sit there and stare at each other for a moment, and then both burst out into torrents of tear stained laughter

They are still laughing today.

The rest is history

LawsofPhysics's picture

Odd, no mention of the Winklevoss twins...

"Full Faith and Credit"

Spaced Out's picture

Cut and paste again? Short it!

jamesmmu's picture

 

“Banksters have infiltrated Bitcoin. Widespread fraud in bitcoin reported by NIA in membership email. Tick Tock” 

 

http://investmentwatchblog.com/banksters-have-infiltrated-bitcoin-widesp...

tmosley's picture

>It is the printing of fake Tether tokens that has fueled Bitcoin’s entire 2017 rise in price

I came here to laugh at you.

brexiteer's picture

That link looks like pure FUD and the tell is that NIA have taken a long position in bitcoin cash, so I guess they aren't that worried about the USDT tether after all!

Buckaroo Banzai's picture

Segregated Witness represents the banksters' attempt to hijack BitCoin--of course, that's just the first step on a long road, they will have to do a lot more work to build on that first step, and the crypto space is way inside the bankster OODA loop right now. The SegWit2x hard fork is going to be interesting to watch.

But the idea that Tether is the bankster instrument of control is laughably absurd. Are you a disinformer or just an idiot?

brexiteer's picture

Can't imagine them retaining many bitcoin if they try to artificially hammer the price down.  Unlike with metals, contract holders will be able to take delivery of those cheap bitcoins and sell them on the open market.  No armed guards or trucks needed.

Yellow_Snow's picture

There already is futures out on BTC, the eToro 30x short contract...  It didn't crash Bitcoin

A82EBA's picture

risk to covering shorts goes up cuz theres actually strong demand for coinz, unlike gold for now

it'd be like shorting bacon and ribeye

Walt's picture

Bitcoin Futures. What could possibly go wrong?

BigWillyStyle887's picture

What exactly is a bitcoin future and do they have any bitcoin available for delivery?

 

I am absolutely fascinated by how hard jews try to skim off the top of everything in the world. Their trickery and deception knows no limits.

tmosley's picture

A number of exchanges offer futures in various crypto markets, and you can get paid to lend yours if you like. The shorting is NOT naked as is the case in corrupt western markets.

dark fiber's picture

Bitcoin Futures.  Prepare for the monkey hammer bitchez.

Yellow_Snow's picture

So where is the Bitcoin Warehouse stocked for deliveries?

dark fiber's picture

The same place the gold warehouse is.  But it will just be the same cash settlement scam anyway, so who cares.

Spaced Out's picture

Monkeys are notoriously easy to disarm.

CynicClinic's picture

Here it comes; derivatives of bitcoin. In other words ether out of ether. This pretty much validates my hypothesis: Bitcoin and the like were created by the establishment to consolidate their hold on alternate forms of currency. Next will come stealth regulation that removes anonymity. Another way to suppress PM prices by diverting funds otherwise allocated to metals into total fiat. I'll bet they'll be lining up for this gamble.

Thought Processor's picture

 

 

Yes.  This is one possibility, among many.

CynicClinic's picture

The suspense is deafening. Regards.

dark fiber's picture

There will be nothing stealth about this.  It will be in your face and celebrated by MSM, for your "protection".

CynicClinic's picture

Sad but have to agree, regards.

Winston Churchill's picture

Something more insidious than that.

Think MERS and how it nearly destroyed private property rights by corrupting realty recording.

I don't think that was unintended at all, in fact it was a primary goal.

Whatever Mosley thinks, blinded as he is by green, some real thinkers are trying to change the vector

of where this is headed.Catherin Austin Fitts for one,her recent lectures on CCs are well worth watching.

I think she absolutely knows where TPB are going with CCs, but its so horrific share dares not speak it aloud for for of

ridicule.

VD's picture

i am starting to suspect that certain posters here might be paid by deep state to shill here. look at my below comment.

Winston Churchill's picture

Only starting to think that ?

Paid shills or grifters,a few true believers mixed in, take you choice.

The PTB own the infrastrure their product has to run on,ergo its theirs anytime the want it,and they are getting the prototyping

work done on the cheap.

Its an accounting system,not a security or a currency,a modern version of the Doomsday Book.

VD's picture

correct. nothing more than that. and btc is the latest scam. to your Fitts mention:

 

https://youtu.be/4HlQC0HLaxA?t=829

 

 

now i have to work (for myself) vs for cass sunstein -- see you later WC and glad there are a few on here that know the real score.

tmosley's picture

>Everybody whose opinion I don't like is paid to have that opinion

WEW.

Spaced Out's picture

What an ironic comparison - the blockchain cannot be corrupted. LOL

Catherine is happy to talk about secret space fleets but you think she daren't talk about cc? Are you barking mad?

Winston Churchill's picture

Computer illiterate or just greedy ?

Everything below your incorruptable blockchain is corrupted from firmware, bios, and operating systems on up.

Building a beautifull mansion,without foundations, in a swamp.

Good luck with that.

Spaced Out's picture

Lol, so you concede that the blockchain itself is incorruptible. Very noble :D


CynicClinic's picture

Yes indeed; Fitts is brilliant. Regards.

Spaced Out's picture

Get you, a "hypothesis". Most peanutz just have guesses.

FreeNewEnergy's picture

That's pretty funny, but, whatever the market will bear.

Bitcoin is the tip of the spear about to burst the bubble of which it itself is a part.

Get us out of here, Mr. Sulu, warp speed 10.

in4mayshun's picture

You're happy about that? You do realize that in addition to the average person not knowing what the hell a Bitcoin even is, that they can't afford one either? In order for Bitcoin to truly be successful it has to be adopted by the mainstream, which it now won't because no one but gamblers, I mean investors, can afford one.

So let's think this thru- I'm a hypothetical young investor looking to save for my future. Hmmm, I can buy 37 shares of Apple which is the worlds leading tech company or I can buy 1 Bitcoin which is a opaque quirky computer algorithm backed by nothing but speculative interest?

Tough decision? I think not. You better time your Bitcoin investment right because you're gonna get rolled if you don't pull out early enough. Gamblers get rich too...if they know when to walk away from the table.

Yellow_Snow's picture

Noob, you don't have to buy a whole Bitcoin, you can buy 10 cents worth

JibjeResearch's picture

Are you trying to sell... bAaha ahahahahahhaha

iLLivaniLLi19's picture

Human psychology is a funny thing. Like how a stock split makes people think a company just got 50% cheaper and its a great time to buy.

iLLivaniLLi19's picture

Human psychology is a funny thing. Like how a stock split makes people think a company just got 50% cheaper and its a great time to buy.

JibjeResearch's picture

ah ahahahaha.... it's useless to explain.. dude ..

you can't win... just give up already lolz eheheh

maplesyrup's picture

"Settled in cash" so now bitcoin will be worth what the cash contracts are worth?

brexiteer's picture

Unless you actualy want a bitcoin....  which most do. 

in4mayshun's picture

If everyone wants Bitcoins then why do you guys get so excited when the dollar price rises?
A. Because Bitcoin is just a means to an end; it's not the end. Hard assets are always the goal.