On Monday December 18, Bitcoin futures made their long-awaited debut on the Chicago Mercantile Exchange (CME). The current outlook suggests a slight bearish trend heading into the next year.
Bitcoin’s value has surged over the past month, beginning December trading at around $10,000 and doubling to more than $20,000 by December 17. The price has fallen since CME’s futures went live, with the price being $18,500 at the time of writing.
CME’s futures suggest a slightly bearish attitude to Bitcoin’s explosive growth heading into the next year, with futures to be settled in January dropping from an opening high of $20,650 to $18,500 at the time of writing.
CME is the world’s largest derivatives and futures exchange and its listing of Bitcoin futures allows institutional investment in cryptocurrency for the first time. Major financial institutions are prohibited from trading in Bitcoin directly due to the market’s current unregulated status.
Each futures contract is for five Bitcoin, giving each January contract a current total value of $92,500. Bitcoin futures appears to have been an attractive proposition for many large-scale investors, with 194 contracts having been sold for a total worth in excess of $3.5 million.
It won’t be a surprise to anyone who’s been watching Bitcoin’s wild price fluctuations over the past year that the value of Bitcoin futures is proving just as volatile, moving by hundreds of dollars within minutes.
Bitcoin’s innate volatility has made longer term futures contracts much less attractive. While 195 contracts have been for January, just 8 Bitcoins futures contracts have been traded for settlement in February and March respectively. There are currently no takers for Bitcoin futures contracts expiring in June.
These longer-term contracts suggest a lack of confidence in continued exponential growth in Bitcoin’s value. Futures contract for February are currently trading at $19,240 per Bitcoin, while contracts for March value Bitcoin at $18,435.