The CME, the world's largest futures exchange, will launch its first bitcoin futures contract tonight. This month, bitcoin has climbed more than 80 percent - on pace for the best monthly gain since December 2013. But CME is only offering contracts on 5 bitcoins, in part to ward off retail participants.
A futures contract, in its simplest form, is an agreement to buy or sell an asset at a future date at an agreed-upon price.
Leading virtual currency bitcoin blasted to another all-time high above $19,000 on Saturday.
But the turnout is low when you look at things holistically. Around $60 million in notional value has traded each day on average.
Bitcoin is more valuable than the circulating currencies of both Hong Kong and India, and it is just a few billion dollars behind that of Saudi Arabia.
"Our evidence finds that the price of bitcoin has been artificially inflated by speculative investment, putting it in a bubble".
There are a number of factors believed to be responsible for this condition. However, as the brokerage arm of the bank realises the huge demand for bitcoin and bitcoin derivatives, Goldman is finally open to bitcoin futures, but at a price for its clients. So it is only reasonable that a little percentage of global Bitcoin transactions take place on the platform. And also that the biggest Bitcoin miners in the world are not only not based in the USA, they are also not built to trade financial instruments. They're built to mine bitcoin.
The notice states that Dealer Members must mark-to-market and margin exchange-traded cryptocurrency futures contract positions daily at the greatest of (i) 50% of the market value of the contracts; (ii) the margin required by the futures exchange, such as the CBOE, on which the contracts are entered into; (iii) the margin required by the futures exchange's clearing corporation; and (iv) the margin required by the Dealer Member's clearing broker.
These issues included the fact that digital currency technology was still developing, the weakness of bitcoin's cash market, a lack of regulation and price volatility.