CME Group to Test Bitcoin Futures, Price Hits New All-Time High

Bitcoin continues to be reacting to market news in yet another volatile session. The top cryptocurrency is rallying strongly today, especially in the past couple of hours. Just after an announcement by the CME Group’s marketing team that the company is planning to start testing Bitcoin futures trading next Monday (20th of November), prices started rallying heavily.

Bitcoin briefly traded above $7,800, very close to the previous highs registered right after the SegWit2x fork cancellation. The CME Group’s announcement still mentions that Bitcoin futures are getting listed only after the conclusion of a pending regulatory review and certification.

Bitcoin Futures Worries

In a statement published as a full-page ad in the Wall Street Journal, CEO and founder of Interactive Brokers, Thomas Petterfy, highlighted the risks associated with Bitcoin futures saying: “A catastrophe in the cryptocurrency market that destabilizes a clearing organization will destabilize the real economy.”

The underlying market for Bitcoin futures is not associated with any physical delivery of an asset but instead settles on a cash basis. The arbitrage opportunities that might become available are a risk to the financial stability of the market players that are trading the cryptocurrency market via derivatives.

The CME Group also has its approach when determining the value of Bitcoin futures. The company is using its underlying CME CF Bitcoin Reference Rate. The Chicago-based exchange defines it as a “standardized reference rate.” The data used for the calculation is an aggregated feed from several exchanges and trading platforms, including Bitstamp, GDAX, itBit, and Kraken.

The price of Bitcoin spiked higher immediately in the aftermath of the CME Group’s message to clients. From just over $7400, the largest cryptocurrency by market cap has hit a new all-time high before subsiding to $7800. The Bitcoin domination factor in the cryptocurrency world has increased back above 57 percent as of writing, as the total market cap of all cryptos surpasses $225 billion.

(Photo: flickr)

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