Warnings as bitcoin futures debut on CME

Bitcoin futures got a muted reception after their debut on CME Group late on Sunday, with volumes in the tens of millions of dollars in the first 12 hours of trading, as warnings about the bitcoin risks sounded ever louder.

The launch of futures by the world’s biggest derivatives exchange operator, and by its rival, Chicago-based exchange Cboe Global Markets, a week earlier, had been hailed by many as the moment that bitcoin reached the investment mainstream.

That view has helped send bitcoin soaring even higher than before in recent weeks.

It is on track for its best monthly performance in more than four years, having almost doubled in price since the start of this month, when it was trading at less than $10 000 (R128 225).

But trading volumes in the CME and Cboe futures have so far been modest.

A total of 751 contracts – each of them for five bitcoins – had been traded on CME’s January futures contract yesterday as of 2.17pm GMT (4.17pm SA time) at $18 970 (R243 411) per contract, just over 13 hours after their introduction, making a total notional value of about $70-million (R897.6million).

On its contract’s debut on December 10, the Cboe traded nearly 4 000 contracts – with a contract size of one bitcoin – during the full session.

By the same time yesterday, 2 712 of Cboe’s January bitcoin future contracts had been traded, making a total of just over $50-million (R634.8-million) notionally. The CME and Cboe futures’ requirements make them unattractive to many cryptocurrency traders.

Warnings about the dangers of investing in an immature, opaque and largely unregulated market continue.

Denmark’s central bank governor yesterday warned investors to steer clear of bitcoin, calling it “deadly”.

Dutch bank ING said that once the current bitcoin hype was over, it would return to being a niche product used by “tech nerds” and some others. – Reuters

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