Bitcoin trading at cme
Prior to Bitcoin futures, many brokers trading Bitcoin via CFD used exchange prices, but can now use Bitcoin futures to determine the price for CBOE futures, this is based on a price index provided by the Gemini exchange - which has itself raised concerns that the price on this exchange being manipulated will affect Bitcoin futures prices. So publically traded futures markets are a more transparent way for professional traders to trade Bitcoin, as the price is tied to a known index and trading volume is far higher than most CFDs would support.
Futures tend to be tied to specific dates though e. Generally futures are traded by institutional investors e. In practice it does. This is the source of many concerns, where because futures allows Bitcoin to be shorted it could potentially cause big price drops. So if they grouped up and sold 50, Bitcoin to trigger a price drop, and sold , Bitcoin via futures at the same time, they'd potentially double their profits. Hopefully this type of behaviour will be regulated in the futures market in particular.
On a more short-term basis, if many investors short Bitcoin via futures and the price starts to go up rather than down, these investors will have to buy Bitcoin at a loss on futures buy it back at a higher price , potentially causing Bitcoin's price to go up further due to this extra buy volume.
When shorting, an investor can lose more money than they originally put into the trade, which could amplify this further.
In the short-term, many posts online claim that investors plan to short Bitcoin via futures. The phrase ' buy the rumour sell the news ' may be relevant here, where until now many claim that Bitcoin's price has been going up due to rumours about Bitcoin futures.
When CME Group futures launches, if there isn't enough liquidity after launch there's likely to be more than normal, but expectations are very high then this large price drop would be more likely.
Regardless, over the coming weeks stay on the lookout for bull traps! If you see a sudden increase in Bitcoin's price it's very possible this is manipulation and that a decrease may follow. The same may also happen in reverse. Now that professional investors are getting involved in Bitcoin trading with larger amounts of money it may become more difficult for your everyday investor to analyse the Bitcoin market. This site cannot substitute for professional investment or financial advice, or independent factual verification.
This guide is provided for general informational purposes only. The group of individuals writing these guides are cryptocurrency enthusiasts and investors, not financial advisors. Trading or mining any form of cryptocurrency is very high risk, so never invest money you can't afford to lose - you should be prepared to sustain a total loss of all invested money.
This website is monetised through affiliate links. Where used, we will disclose this and make no attempt to hide it. We don't endorse any affiliate services we use - and will not be liable for any damage, expense or other loss you may suffer from using any of these. The Chicago Board of Trade is the leading trade platform for soft red winter wheat. On November 1, , CME announced they will begin trading in Bitcoin futures [11] by the end of , pending regulatory approval.
From Wikipedia, the free encyclopedia. Securities and Exchange Commission. Retrieved February 15, Retrieved April 8, The futures of capitalism". The Wall Street Journal. Retrieved 6 December Business data for CME Group: Finance Reuters SEC filings.