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CME will expand Bitcoin Future trading and introduce options

  • The Chicago Mercantile Exchange (CME) will expand its offering for Bitcoin futures contracts to include options.
  • The trading limit per investor will be increased from 1,000 to 2,000 BTC contracts.

In December 2017, the largest Bitcoin bull run ever in the history of the crypto market kicked off. One alleged reason was the launch of the Bitcoin futures on the world’s largest options and futures exchange, the CME, in the United States of America. Although the futures contract business flattened significantly last year, the volume increased again this year.

For this reason, CME wants to expand its portfolio to give investors more opportunities. From the first quarter of 2020, the CME intends to offer options for the Bitcoin futures and thus expand its offering.

Will more money automatically flow into the market now?

Options offer investors the opportunity to hedge their open positions in Bitcoin futures contract trading and are considered a more conservative way of trading. The introduction of the options is a logical consequence due to the increased demand of some large players and the increasing volume in equal measure, describes Tim McCourt, CME executive:

Based on increasing client demand and robust growth in our Bitcoin futures markets, we believe the launch of options will provide our clients with additional flexibility to trade and hedge their bitcoin price risk.

These new products are designed to help institutions and professional traders to manage spot market bitcoin exposure, as well as hedge Bitcoin futures positions in a regulated exchange environment.

The CME also plans to double the volume of trading positions.

Double trading volume = rising Bitcoin price?

The CME not only wants to double the contract volume from 1,000 to 2,000 futures contracts per investor, but also to double the volume used from 5,000 Bitcoins (51 million dollars) to 10,000 Bitcoin (102 million dollars). CME is thus reacting to the new competition in futures contract trading from the Bakkt exchange. Bakkt is a new platform that will offer various assets (including Bitcoin futures trading) and will be operated by the Intercontinental Exchange (ICE), the world’s second largest exchange.

On Monday, Bitcoin Future will officially start trading on the Bakkt exchange, which was due to start at the beginning of the year but has always been postponed to a future date due to regulatory uncertainties. Many crypto enthusiasts see a great chance that this could lead to a rising Bitcoin price, perhaps even a new all-time high.

The Bitcoin and Bitcoin futures trading continues to rise. This also shows, for example, how the CME’s daily trading volume of up to USD 350 million is rising. The acceptance, as well as the adaptation of Bitcoin and the Bitcoin Future trading is thus also decisively advanced. However, at this point it should be clearly pointed out that this is no guarantee for a rising or falling Bitcoin price. Some investors are placing great hope in the approval of a Bitcoin ETF.

VanEck and SolidX recently withdrew their application to the SEC (Security and Exchange Commission) for reasons not disclosed. The SEC has two further applications from Bitwise and Wilshire Phoenix. A statement on these applications is expected on September 20, 2019 and October 13, 2019. Whether the SEC will approve a Bitcoin ETF this year remains to be seen.

About Author

Reynaldo Marquez has closely followed the growth of Bitcoin and blockchain technology since 2016. He has since worked as a columnist on crypto coins covering advances, falls and rises in the market, bifurcations and developments. He believes that crypto coins and blockchain technology will have a great positive impact on people's lives.

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