Cryptocurrency Derivatives Series: Monthly Updates on CME Bitcoin Futures

CME Group has been active in devising and developing the cryptocurrency derivative products.

They recently announced the latest update about CME CF Ether-Dollar Reference Rate & CME CF Ether-Dollar Real-Time Index. A couple of veterans predict the possibility of the firm introducing ether futures.

While the open interest for bitcoin futures on CME has surged bit by bit on MoM basis. Open contract numbers have risen to a record-breaking 6,096 by the end of June. This is mainly due to the mounting demand from institutions and professional traders for the trade during the cryptocurrency avenues rallying to record highs in 2019.

And there seems to be the issue of potential manipulation with the cash-settled contracts which deters some institutional investors from participating. This is because the settlement is based on a collection of bitcoin spot prices on a number of exchanges with variable liquidity, which the traders may be able to manipulate during the time of a futures contract expiry (in order to influence the futures contract’s settlement price).

We have an array of derivatives markets for traditional asset classes, such as, from a range of stocks to mortgages, be it ETFs, index funds, index options or hedge funds, etc. Many Wall Street players are now, lined up for such contracts are being designed and developed for bitcoin and other crypto peers and desperately eyeing to obtain regulatory approvals. 

Most importantly, worth noticing the fundamental development that bitcoin’s hashrate also registered a new all-time high. Hashrate represents the speed at which a given mining machine operates on the Bitcoin network, and the number of calculations it can perform every second. Hashrate is a vital metric for Bitcoin miners. A higher hashrate means that miners have more chances of solving the Bitcoin block reward puzzle. It also means the blockchain is consuming more energy to process transactions, and this makes it more secure as the cost of a 51% attack rises in tandem.

In recent past, a couple of cryptocurrency firms have begun peddling“structured products” driven by the price of bitcoin. The payout from such modern-day contracts is absolutely dependant on complicated formulae. The entire crypto industry is still evolving, and the market is in the evolutionary phase. Courtesy: BNC 

Currency Strength Index: FxWirePro's hourly USD spot index was at -25 (mildly bearish), BTC is flashing at 98 (highly bearish), while articulating at (11:45 GMT). 

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