As Traders Await Bitcoin Futures, Margin Requirements Are High


Cboe Global Market Inc., which announced that amount on Monday, hasn't updated it through bitcoin's wild price swings in the days since. The settlement price for a bitcoin futures contract expiring on January 18 is $17,055 on the CBOE website, as of this writing.

The blockchain-based digital currency reached its peak price two days after USA derivatives exchange Cboe Global Markets launched bitcoin futures; a move that aimed to legitimize the unregulated digital currency, which has been associated with ransomware attacks and other illegal activities.

The launch of Bitcoin futures at CBOE is set to be followed by its cross-town rival, the Chicago Mercantile Exchange (CME) Group, which plans to launch its own version of Bitcoin futures trading on December 18.

A similar undertaking was made by Interactive Brokers, who did now allow shorting and required a 100% margin on bitcoin futures.

JB Mackenzie, managing director for futures trading at TD Ameritrade, commented on TD Ameritrade's move into the futures market. Hedgers are concerned with protecting themselves from future price drops.

Bitcoin futures and other derivatives would make it easier for more investors and speculators to trade the new asset class.

At $300 billion, bitcoin is now the world's 15th largest currency, as measured by the M1 money supply, a classification that measures the value of physical currency in circulation, as well as liquid bank deposits. In this regard, the trade association for the futures markets, the Futures Industry Association warned the U.S. regulator that not enough risk evaluation has been done on Bitcoin and the risks it poses to financial stability. Bitcoin futures are cash-settled. Hong Kong's regulator issued a warning that only licensed firms can offer such products within Hong Kong. The Tokyo Financial Exchange is working to list bitcoin futures products as soon as possible.

As the CEO of Goldman, Lloyd Blankfein has said many times that he is in two minds about bitcoin and all the hype related to it.

This may be starting to change with more retail participation, higher volumes and a higher dollar value in futures trading. "We're targeting the more professional type trader and the institutional investor". The advent of futures trading may well further inflate the "Bitcoin bubble" and push it to its bursting point.