Bitcoin Continues Upward Climb Despite New Futures Deal

A copy of bitcoin standing on PC motherboard is seen in this illustration

REUTERS Dado Ruvic Bitcoin Races to $20K Mark as CBOE CME Introduce Cryptocurrency Futures

TradeStation Group president John Bartleman said: "We believe that CME's launch of the new Bitcoin futures contract represents a major milestone in the development of cryptocurrency derivatives markets that appear to be more fair and transparent than trading the underlying cryptocurrency". The website's Bitcoin Price Index had it priced at $19,400 at the time CME launched the contracts.

"We saw a nice open on light volume, but pretty uneventful so far", Spencer Bogart, partner at Blockchain Capital LLC, said shortly after trading began on Sunday. The contracts may be bought by institutional investors who are not allowed to purchase bitcoin directly.

CME is a much bigger player in futures than CBOE so many expected its debut would make a bigger splash.

With its need for "further analysis", Ally Invest joins several other financial firms who are now not offering their clients access to bitcoin futures, including mutual fund company Fidelity Investments and Charles Schwab.

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The derivatives exchange was one of the first to move from the open outcry, "pit-style", form of trading common in the nineties, to a full-fledged electronic trading platform.

The contract was last at $18,805, below the $19,500 reference price set by the exchange for the January contract. However, the CME contracts are worth five times as much as they are based on 5 bitcoins rather than the one of the CBOE.

That looks like a win for the CBOE but there's more below the surface.

In the futures market, margin refers to the initial deposit made into an account in order to enter into a contract. TD Ameritrade Holding Corp. said late Friday that it will offer Cboe's starting on Monday, though it'll wait to offer the CME contracts until they demonstrate sufficient liquidity. The bid-ask at the CME at both ranges from $20-$40. Brokerages often have higher requirements than the exchange itself. Interactive Brokers Group Inc., which has said it handled 53 per cent of the first day's trading in Cboe's bitcoin futures, will require a margin of 50 per cent for long investments, and about 240 per cent for short selling, based on current rates, according to Interactive Brokers spokeswoman Kalen Holliday.

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