The CME has announced that their BTC Futures contract will begin trading on Sunday evening Dec 17. This will usher in a new era for the sector as it will open access to trading BTC to a great many new participants without them actually having to have a wallet and all that goes along with it. As well the often talked about opportunity for naked shorting of BTC becomes available and the result of this will finally be felt by the market.
The actual number of accounts/individuals/entities that show up to trade BTC futures is not known but the industriy's FCM that are members of the CME will be very cautious on allowing access to this market. The volatility of the market along with an unknown upside threshold at any time will force risk control departments of these firms on edge. None of these firms want to have to chase a client for debit balances so they will be cautious and likely to initially set their margin requirement higher than the CME's minimum margin for protection. Some FCMs will likely not allow access until there is some history from the contract.
All in all this will be an interesting time in the development of Bitcoin and this new asset class. One can expect that there will be additional futures contracts launched on other crypto coins.
How do you think this will affect BTC price?
Still some time to digest this but my belief is that there will be more people interested in buying as apposed to selling. There should be some effective professional arbitrage organizations so any premium over cash will have a cap. One issue is that a lot of the FCM brokerage firms are not going to allow customers to trade this starting day one. I think a little upside pressure but then again anyone buying will likely have tight risk so volatility is likely to be pretty much the same. For those who bought BTC on the news I expect them to have very little risk tolerance and likely will dump their positions if this weakens much below 10000 .
Wow that is very insightful! It’s really a very exciting time to be involved in the crypto Curren world. I wonder how altcoins are gong to be affected?
I wish I get paid before all this happens so I can strengthen my positions 😋