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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tmosley's picture

No, its a Nocoin whining thread.

As per the usual.

affirmed_78's picture

No-bitcoiners don't seem to understand that money is a social construct.  It's a medium of exchange and record of account.  It doesn't have intrinsic value.  What is a better medium of exchange and record of account than a currency that is decentralized, limited, censorship resistant and maintained on a global triple entry ledger that is fully transparent, yet pseudonymous?  

 

Take emotion out of the equation and really think about it.

scatha's picture

Wow. BTC: from zero to hero pushed by gamblers anonymous as XXI century version of Tulip mania of XVIII century or beanie babies craze of 1990-ties.

Now “too big to loose” Wall Street cronies joined this mindless frenzy [with their QE printed money splashing around not knowing what to do with it] that is fueled by raw fear of supposedly coming hyperinflation or worse.

I do not blame people of being scared by high likelihood of being institutionally pauperized by FED and a WS gang but it is not excuse for stupidity and running into killing fields those oligarchic mofos prepared for people who work for living and save money for the future to be fucked up once more and again.

After Bitcoin cash, Bitcoin gold, Bitcoin CME futures, prepare for Bitcoin tulip or Bitcoin Beanie Baby Retirement Fund [BBBRF] and all the laughable shit.

It never cease to amaze me how people loose IQ as soon as the old good greed infects their little minds filled by raw fear, squeezing out any last shred of reason from brains splashing with dopamine in a way rivaling that of hard heroine junkie. It is a mad house taken over by mental patients from WS and DC who must be lock up and eradicated from American society as stinky useless waste. 

It is hard to find anything on the Web about bitcoin et al., that is not just straight sells pitch or propaganda BS or warning about upcoming dollar apocalypse while providing no shred of factual or fundamental analysis of BTC as potential currency only bragging about conversion/exchange rate BTC to fiat money that has no innate real value in itself, as those same authors loudly posit.

The massively printed by World central banks fiat money did not result in hyperinflation so far only since it is hoarded by oligarchs and global corporations in a form of cash like Apple Inc., $250 billions cash or they immediately re-invest in the same fiat denominated financial asset class (stocks/bonds from where the money came in the first place, while starving mainstream economy CapEx that could bring meaningful employment and hence healthy and real economic growth)  leaving mainstream economy in shambles and fiat monetary circulation among ordinary people practically dead only kept in come by massive debt incurring and spending of US and world governments.

The cryptocurrencies are very important technological development but are being prostituted and abused as a hype by sleazy Wall Street stooges, even TBTF banks embraced it as a speculative asset and/or as they push innovation of their own private money transfer system, a private Bitcoin et al., blockchain infrastructure run on closed banking network and used not only for money transfer but as bonds, stocks  other assets and private contracts.

The very worrying is growing Astroturf of Wall Street startups run for example by Blythe Masters [former JPM banker-banned by SEC for financial crimes].

If you really want to now what is going on with Bitcoins, I found this most comprehensive review and critique of the BTC, for potential BTC users and newcomers devoid of mass propaganda and sales hype:

https://sostratusworks.wordpress.com/2017/06/01/tales-from-crypto-world-...

 

 

Yellow_Snow's picture

NEW RECORD  BTC = $6431.09   :)

Seems the more no-coiner 'oldbugs' bitch about Bitcoin  the higher it goes !!!

Silver Savior's picture

Yeah but in today's money 6k is like a couple of bucks. lol. What are ya gonna buy with it? Waste it on something dumb?

Nature_Boy_Wooooo's picture

You put a lot of time into this post.

You mad bruh?

 

koan's picture

Everything of value is by agreement, understand this.
That means we agree that a dollar is worth a dollar, that an ounce of gold is worth x dollars, and the bitcoin is worth x dollars.
It works because we all participate and agree.
But gold, fiat, and bitcoin aren't worth anything in reality, because you can't eat or drink or build shelter with them.

We all share a consensual delusion that useless things are useful.

Zuhalter's picture

I'm not a crypto fan, but I can see this being more of a good thing for BTC. Derivatives allow speculators to pool greater risk liquidity. Theoretically this should allow BTC to experience less volatility making it more viable for those who prefer to use it as a currency, and less of a speculative investment.

GooseShtepping Moron's picture

Is anybody buying these Bitcoins to actually use them, or is this just speculative gain?

tmosley's picture

Perhaps you could delineate the difference between speculation, savings, and reserves.

In the end, they seem like three different words for the same action, where the only difference is in the mind of the person carrying out said action. IE a delusion.

Full Court Lugenpresse's picture

"I don't understand the difference between very basic financial terms, therefore there is no difference!"

Here's a remedial lesson for the cheap seats:

speculation: buying an asset in the hope its valuation will increase (preferably as fast as possible) so it can be resold at a profit.

investing: buying an asset to collect the organic earnings/cashflows generated by that asset over time (interest, rent, dividends, royalties).

savings: wealth held in a stable, low-risk form, usually in preparation for a specific use (e.g. buying a house, paying for college)

reserves: wealth held in a liquid form as a protective buffer against potential or expected losses

There's nothing wrong with speculating as long as a person knows that that's what they're doing. But I'd say easily 95% of people buying cryptos are pure speculative buyers, which means they will 100% cash out and flee once they feel the easy money has been made. BTC is now in a state where it must post constant, rapid growth (which requires new money inflows) or crash. Not a sustainable situation.

tmosley's picture

You just said what I said, idiot.

The difference is intent, which is no difference at all. A delusion.

Silver Savior's picture

I use Bitcoin but only as a way to get money into coinbase to send it elsewhere to buy dogecoin, ripple and stellar Lumens. The currencies which are actually useful. lol. I never liked Bitcoin and will not hold it no matter how much it's worth. Never liked the name, the arrogance of most of the people who hold it, it's utility, and now with all the forking I really don't want it. So much for it's long term fundamentals. I will choose altcoins any day. And damn, Bitcoin is slow as fuck.

Spaced Out's picture

Lol, "I never liked the name"....but I like Ripple and stellar lumens. OOOh yes.

Edit: congrats on your grasp of investment fundamentals :D

Armed Resistance's picture

Wow, this is great! Now big financial institutions can buy and sell bitcoin they don’t have with money they borrow for free! Naked shorting to begin in 3,2,1..:

hsun85's picture

Top is near, boys. Now they can short it.

koan's picture

Muh bitz.... I knew I sold too soon, my question now is will it go back below 6k?

activisor's picture

Those lauding Bitcoin as the greatest thing since sliced bread, need to consider one thing.  Those who bought cheap have done well, but at $6000.00 per Bitcoin they are  way out of reach for the average buyer. Why would you buy at this price when you could buy a lot more gold and silver ? Only the wealthy have the means to buy Bitcoin now.

Spaced Out's picture

You don't have to buy a whole one. Sheesh.

JibjeResearch's picture

BAwah ahahah aha a lolz ....  I guess you have btc and is trying to sell ...lolz BAaha ahahahah

Spaced Out's picture

I haven't sold since 2013. And now I'm rich :D

JibjeResearch's picture

I'm happy for you... I like seeing people happy...

 

I have Ethereum... and will never buy BTC..

 

I'm more rich Bawaha ahah ahahahahahah with better decision BAwahhahahahahha

brexiteer's picture

I can't afford a dollar, I only have 50 cents.... These dollar things will never catch on.

kochevnik's picture

Invest one BTC in mining, get three in one year

conraddobler's picture

Deception always requires being at leat one step or more ahead of the mark or marks.

The ultimate goal is control over everything, there are two main forces at work in the world today, human liberty and the enslavement and control over everything.

Everything is being ramped into those two camps, chosing a side is not going to be optional, you must chose one or the other.   Many times what appears to serve one side or the other is actually backwards.

All you need to sort it out is a very simple metric.

Can it be used to ultimately control everything and how would that work?  Ask that question first and you'll be able to easily navigate what is going on but it requires a highest level of understanding of how the world really works.

Anyone who sees it like this can see they are doing exactly what we did to the Native American's, we shot all the buffallo because that was their food source. Until we did that they just kept adapting to whatever we threw at them.

Today, money is our food source, they are going to make it so by whim, anyone can take away your money, to do this you need to make it impossible to store cash that is untraceable.

Anything traceable is the goal, anything that can be traced, is a tool to avoid any kind of annonimity.

It doen't matter what that unit of measure is, the goal is to move it from the realm of untraceable, to the realm of the traceable.

Do you think that Satan tempts with anything less than very tempting tools?

Of course not, of course this thing is going to go parabolic to suck everyone in, no one is thinking they are doing Satan's business when they are doing it they think they are doing something for their own family.

The one single trick used over and over again is to get you to feel isolated and above others so that you won't bond together because only in isolation can you be selfish enough to power the entire machine that will grind everyone to dust.

It always has to be a willing choice, seems to be a rule of the game.

Spaced Out's picture

Anyone else in the infant class got an opinion?

I'd bet good bitcoin that you are american. Very sad.

Full Court Lugenpresse's picture

"Bitcoin price spikes/collapses as wave of speculative buyers enters/exits the market"

- every Bitcoin story ever

Almost getting tired of repeating this same comment over and over, but as always the real story is what is not said: are people using Bitcoin to buy normal stuff? No (nobody accepts it except Overstock.com LOL). Are they using Bitcoin for small-scale money transfers? No, they use Paypal/Venmo. Are they using Bitcoin as a stable store of wealth? Obviously not, it still swings up/down by double digit percentages every week as early adopters cash out their holdings on greater fools.

The only practical application it has is buying drugs and cheese pizza. Other than that it's just a solution in search of a problem, which is why people are buying it as a lottery ticket instead of a true currency. Hey, guess what, people get rich playing the lottery too, but it's still a stupid way to spend your money.

 

spqrusa's picture

When your average bitcoin cost is <$500, a $500 swing at these prices are not significant... It is an excellent long-term store of value, and we don't buy peanuts with Bitcoin. It's more like homes and cars at this point. And, we don't care that we have to convert to phony fiat to buy stuff.

Full Court Lugenpresse's picture

A $500 drop still leaves you $500 poorer regardless of your cost basis, retard. Then you go on to admit that I'm right, it's a "currency" that is useless for buying anything and has to be converted to real money to be used (hey I hate fiat as much as the next guy but it does have the tiny advantage that YOU CAN SPEND IT, plus you never wake up and find out it's suddenly worth 20% less overnight).

As for "long-term store of value", you're really grasping at straws since we both know BTC has a microscopic history and could easily wind up being a fad. As much as cryptotards rip on gold they've got no rejoinder to the fact that a pile of gold would've made you a rich man 3,000 years ago and would still make you a rich man today.

koan's picture

It doesn't have to be converted, there are plenty of online stores and services accepting Bitcoin.

Golden Phoenix's picture

You'd have to have been a rich man in the first place to get a pile of gold and 3,000 years later you'd be exactly as rich as you were then. And the people who sold you the gold would be laughing their asses off at having bought their gold to 'store value' while they used the proceeds to earn interest, capital gains, etc. and left you in the dust. Then they'd just take the gold back when you return to dust and start the cycle all over again. 

EcoJoker's picture

You just singlehandidly expressed why Bitcoin ISNT a bubble. It's nowhere near mainstream use.  When that happens, then it crashes

Spaced Out's picture

"nobody accepts it except Overstock.com"

Do some goddam research sonny.

Full Court Lugenpresse's picture

Notably absent from your comment: any major retailers that accept BTC (and no, using some super-convoluted 3rd party method to buy stuff off Amazon doesn't count, as it will never go mainstream). Retailers don't want BTC because they don't want to deal with the conversion headaches and price swings, period.

Just last week ZH had an article citing the 3 biggest companies that take BTC as Overstock, Microsoft, and some other 3rd one I'd never heard of. They cited this as proof of mainstream acceptance.

Spaced Out's picture

Microsoft isn't "nobody", agreed?

Brazen Heist's picture

I love the technological potential of crypto (blockchain) and own/mine many coins myself, but I think Bitcoin is in some bubble territory now. This feels like the run up in 2013.

Too much dumb money has entered this market.

I don't care too much if it corrects since I bought so low to begin with, but I do think there are some technological hurdles to overcome before it becomes truly widespread and seamless. There seems to be a power struggle going on atm about the direction of Bitcoin. And in the meanwhile, the dumb money keeps on pouring in.

I'll happily embrace a correction soon to flush the market out and reality-check some fools who have been telling me its going to $50K soon. Come on, calm down people. It aint supposed to be about hoarding.

EcoJoker's picture

25 million people out of 7Billion is not a bubble.

Brazen Heist's picture

Firstly, lets cut down the 7B figure down to those who have internet access...

Secondly, corrections should be embraced, not avoided. Free markets are supposed to correct. Unlike the fiat, centrally planned economy that rigs all markets for the 1% and do everything in their power to prevent the market from being "free" on the downside.

Spaced Out's picture

"Too much dumb money has entered this market."

Fewer than 2% of people own bitcoin. Given that 80% of people are idiots, how do you arrive at that conclusion? Unless of course......

Musum's picture

Bitcoin has been "appropriated" by authorities.

This is a death knell for (independent) crypto. Not a good thing for Bitcoin over the long run, but perhaps it depends on how you look at it.

It finally becomes a mainstream product, but it also means vulnerability to manipulation by the FED and and government authorities, just as with gold and other commodities.

In the hands of government, Bitcoin becomes an NSA tracking tool.

Spaced Out's picture

"Bitcoin has been "appropriated" by authorities."

I'd love to see your source for that but somehow I think you won't be able to provide one.

Musum's picture

I don't mean appropriated literally. But when Bitcoin goes on a government controlled exchange, it's all but captured by authorities. It's too easy to manipulate.

kochevnik's picture

So stop sucking the tribe teat

Musum's picture

Going mainstream is a way for the tribe to control crypto.

el buitre's picture

Well they could naked short it on the CME 100 to one  and more like PM's to control the price and protect their worthless fiat.  OTOH, they might "naked long" it to drive the price even higher.  Does the Cabal really regard cryptos as a threat to its control of humanity, or is it the 8 lane highway to the reset and the Mark of the Beast?  Only the Shadow knows.  I'm waiting to read of bitcoin plated tungsten bars sent by the West to China.

slug1's picture

The value of Bitcoin is determined by what the next buyer is willing to pay for it and nothing more.

 

It has:

No dividend

no producer use

no consumer use

 

.gov letting the peons build out the network for shitcoin and when its done .gov will outlaw shitcoin and will take over the network to use with .gov coin

 

 

 

Golden Phoenix's picture

If bitcoin has no use then Western Union, Paypal, and the banking system have no use.