FxWirePro: How distinct BTC futures are from Conventional derivatives?

Before heading into the core area of discussion, let’s just swiftly glance through the futures contracts that are of either cash settling or physically deliverable. Futures contracts that are physically delivered require the holder to either produce the commodity or take delivery from the exchange. On the flips side, the derivatives contracts that are of cash-settled would not be entitled to claim for physical delivery and a simple debit or credit would be issued when the contract expires.

Well, contemplating now the much buzzing underlying asset which is cryptocurrency (i.e. BTC), Bitcoin futures would be cash-settled and not require the owning of wallets and a physical delivery of coins. Because of Bitcoin's high volatility, the futures settlement will require higher margins of 44% to offset the potential for sharp price moves.

What traders have now is a "spot market" provided by exchanges with wavering legal prominence and frequently overwhelmed by cybersecurity issues. The presence of a Bitcoin product on a well-run market, hence, created another huge wave of optimism as the once hobbyist coin is now seen as a mainstream asset class.

The one-month Bitcoin futures of CBOE or CME would be cash-settled, with no delivery of actual Bitcoins. This would most likely cause hitches with liquidity, despite the price constraints of futures trading. The Bitcoin has shown it could move by 20% in a day, the extreme range of volatility allowed on the futures markets. Given the potential glitch in this futures market operations are addressed, long-term trend of the cryptocurrency industry goes intact amid minor obstacles.

Amidst the high volume of trading and massive hype around the launch, the CBOE website also experienced issues due to increased load and they tweeted the same, confirming that the high-traffic was causing temporary unavailability.