World's First Bitcoin Futures to Start Trading

Bitcoin logos are displayed at the Inside Bitcoins conference and trade show in New York in April 2014

Bitcoin logos are displayed at the Inside Bitcoins conference and trade show in New York in April 2014

The launch confirmation comes months after the Chicago-based exchange first detailed its plans to create a bitcoin futures product.

CME's bitcoin futures contract launches December 18, available for trading on the CME Globex electronic trading platform, the world's biggest derivatives exchange said on Friday. The cryptocurrency is now trading at roughly $11,400, as per CoinDesk's Bitcoin Price Index (BPI).

The price of bitcoin slumped 10.9 per cent from a record high of $US11,845 to $US10,550 before bouncing back to $US11,294 at 11am Perth time. For example, traders are not allowed to hold more than 1,000 bitcoin futures contracts at the same time in CME. At 19:54 UTC on Monday, bitcoin was trading at $11,237.19, unchanged in the last 24 hours.

Cboe and CME were given approval from the Commodity Futures Trading Commission to list bitcoin futures on Friday after the rival bourses were able to show that their proposals met the necessary regulatory requirements. But there are a couple of differences between bitcoin futures trading at the two exchanges.

At CBOE, the contract limit is 5,000. Bitstamp, GDAX, itBit and Kraken are the constituent exchanges that now contribute the pricing data for calculating the BRR. Those amounts may become higher in the future.

Bitcoin derivatives will likely attract more heavyweight investors, which will gradually reduce the cryptocurrency's volatility, as well as increase its liquidity and steady its exchange rate with fiat currencies, said Wang Liren, senior researcher at the China Blockchain Research Alliance. CBOE has already expressed its desire to list these products, and - just this week - The Wall Street Journal reported Nasdaq Inc. hopes to list bitcoin futures on one of its US exchanges during the first half of 2018. The entry of institutional money is also expected to act as a stabilizing mechanism for the cryptocurrency's recent wild price swings.

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