Once you are approved to trade futures, you still need access to /BTC to add bitcoin trading to your account. To request access, contact the Futures Desk at Apr 01, · Bitcoin futures real-time market data is available on MDP Channel , and Bitcoin futures historical data is available through CME DataMine. Additionally, real time-market data for the underlying BRR Index is available through MDP Channel during normal market hours, while also available 24/7 through CME DataMine’s Streaming Service. Jan 20, · There are currently two exchanges that accept Bitcoin futures: The Cboe futures exchange and the CME Group. You can choose the exchange you want but it would be recommended that you select the one with the highest number of Bitcoin futures issued, as they offer more liquidity.
How to trade cme bitcoin futuresBitcoin Futures
Futures contracts are created based on demand and do not get automatically created in the marketplace, involving two parties, where one party is going long on an asset class, while the other goes short.
Upon expiry of a futures contract, the settlement is either physical, in the case of commodities, or via a cash settlement in the case of Bitcoin, though the futures contracts are likely to change hands on numerous occasions before expiry.
As investors have become more knowledgeable about the markets and the influences on asset classes, the futures markets have become a guide for investors on the likely direction of commodities, stocks and indexes on a given day, with crude oil futures, gold futures and the the Dow Jones reflecting investor sentiment towards the respective instruments and the direction based on the flow of information that influences supply and demand dynamics.
For investors looking to hedge, there will already be some form of an exposure to the spot or physical and the futures markets allow the company or investor to protect the upside or downside with a futures contract. As an example, airlines are well known to protect themselves against significant rises in crude oil prices, by buying a futures contract today with a specified price and delivery date in the future, on the assumption that oil prices will be on the rise over the period in question.
In this case, the airline is exposed to the cost fluctuations of crude oil as a physical but is looking to protect itself in the futures market. In this example, the airline would be taking a long position, while the party obligated to deliver the crude oil will be taking a short position, as they are the seller, while the airline is the buyer.
An airline is unlikely to take a short position in crude oil, as declining prices benefit the bottom line. In contrast to investors or companies looking to hedge exposures, speculators will be looking to benefit from the price fluctuations of an asset class without actually having a physical exposure to the asset class in question. The incentive for a speculator is profit from the general direction of contracts decided upon by their outlook on supply and demand for the particular instrument.
Hedgers can go either long or short. Short positions are taken to secure a price now in order to protect the hedger from declining prices in the future, while long positions protect against rising prices in the future.
Speculators go short on the expectation of prices falling in the future while going long on the assumption that prices will be on the rise. With Bitcoin now having been in existence since and become a sizeable instrument by market cap comparable to some of the largest listed companies on the U. S equity markets, it comes as a little surprise that futures exchanges have moved ahead on offering investors with the option of Bitcoin futures contracts.
The Cboe futures exchange launched Bitcoin futures on 10 th December and is considered to be the first step in the evolution of Bitcoin into a mature asset class, with the futures market providing investors with greater liquidity, transparency and an efficient price discovery system. CME Group followed Cboe with the launch of Bitcoin futures on 18 th December , with both exchanges providing hedgers with a platform to hedge existing exposure to Bitcoin, while both allow exposure to Bitcoin without actually owning Bitcoin, opening the door for the speculators.
For Bitcoin, miners will receive some relief from the launch of the futures market, with the sizeable investments into mining equipment, not to mention exponential gains, needing some protection against price declines, while the speculator may be looking for the rally to continue and reach the stratospheric heights predicted by some in the marketplace, or in some cases, for the bubble to burst.
Both exchanges have opened the door for the larger institutional investors to get in on the Bitcoin game through a more regulated, transparent and liquid market.
Since Bitcoin is a virtual currency, settlements will be cash-based and in U. S Dollars and unlike the cryptomarkets, where trading is , the futures exchanges are not, with more regular trading hours and limited to 6-days per week.
For those looking to enter the Bitcoin futures market, the first and fundamental question is whether the motivation is speculative or to protect current Bitcoin earnings from any downside. Choice of exchange may be considered arbitrary, but it would be best to go with the exchange with the greatest number of futures contracts issued, as both will be considered liquid from an investor perspective.
As we addressed before, contract sizes differ on the respective exchanges as do margin requirements, so these are also considerations. When looking to trade with margin, this is essentially the funding component of the trade executed on the futures exchange. As investors will not actually own Bitcoin itself, there is no need for the full value of the purchase to be paid in advance of the contract expiry date. In the event of an investor holding a contract until the expiration date, the amount paid, if out of the money, is limited to the difference between contract price and the actual price.
The margin is placed on a margin funding account as collateral for the trade. In addition to the collateral, also referred to as initial margin, investors are required to meet Mark-to-Market calls during the duration of the futures contract. The reverse is also possible, where the exchange funds the account where the investor has margins in excess of the required amount.
In the event that the margin funding account falls below acceptable levels, the investor will then be required to fund the account to meet future MTM requirements. As we mentioned above, contract sizes between the 2 exchanges are different, with the minimum contract size on the CME Group exchange being 5 Bitcoins, compared with 1 Bitcoin on the Cboe exchange.
Final settlement on both exchanges is in U. S Dollars, with no actual Bitcoins held during the duration of the contract that requires settlement. With futures contracts being a 2-sided market, involving a buyer and a seller, counterparty risk on the final settlement is absorbed by the respective clearing houses and not the party in the money.
For this reason, market liquidity is particularly important for those holding futures contracts as an inability to find a buyer can have quite dire consequences to the futures market and the price of Bitcoin itself.
Since the launch of the Cboe and CME Bitcoin futures, Bitcoin has received a double bounce in value, with the upside in Bitcoin coming off the back of Bitcoin futures valuations on each of the individual launch dates. With the general theory being that the smarter institutional money is going into the Bitcoin futures market, investors in Bitcoin will be looking towards the futures market as a guide to the future direction of Bitcoin, based on information available in the marketplace.
Added to the influence of both the Cboe and CME group Bitcoin futures is the fact that both provide investors with the option to go long or short. Read the FAQ on our Bitcoin options. Watch the videos to learn more on how our Bitcoin contracts work and how they can be used.
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