Bitcoin Gears up for Futures and Possible Hedge Fund

When can you be able to short this product, I think sometime in the second week in December you’ll see our contract out for listing,

That’s the word from Terry Duffy, chairman and CEO of CME Group Inc [NASDAQ:CME], The operator of the world’s largest options and futures exchange.

For all the bitcoin doubters it means they can finally put their money where their mouth is and short bitcoin. Something that I’m sure a lot of bitcoin bears would have loved to do over the weekend, when bitcoin dipped just shy of 30%.

And while CME’s bitcoin futures won’t actually trade the cryptocurrency — instead settling in cash — it will bring bitcoin to Wall Street. And with it, a whole lot of volatility. Which is actually atypical of futures.

Generally futures are designed to smooth out price swings. That’s not the case for Duffy and CME though.

I’m not trying to rein in the volatility of bitcoin,

But what I want to do is give it a place for other people to lay out that risk. Today you cannot short bitcoin. So there’s only one way it can go. You either buy it or sell it to somebody else. So you create a two-sided market, I think it’s always much more efficient.

According to CME’s website they won’t let things get too out of hand though, stating the limits are set at:

Special price fluctuation limits equal to 7% above and below prior settlement price and 13% above and below prior settlement price and a price limit of 20% above or below the previous settlement price.

Whether the exchange is successful or a flop, it’s an important milestone for bitcoin. One that could open the floodgates and bring bitcoin to the masses.

First futures, then hedges

With a futures exchange all but guaranteed, it’s looking likely that another investment management firm may now turn their attention to bitcoin.

Reuters has reported that Man Group PLC [LON:EMG], CEO Luke Ellis told them,

‘[Man Group] will add cryptocurrencies to its investment universe if the Chicago Mercantile Exchange launches a bitcoin futures contract as planned,’

Nothing seems to be set in stone yet, and we don’t have any details on what Man Group plans to offer. But still, it’s an exciting prospect for bitcoin trading moving forward. Especially if they actually trade and settle with bitcoin over cash. We’ll just have to wait for all the details.

Which gives you a window of opportunity to get in before everyone else. Stay ahead of the curve, and learn how to get a hold of some bitcoin yourself, today.

Regards,

 Ryan Clarkson-Ledward,
Junior Analyst, Money Morning


Ryan Dinse is an Editor at Money Morning.

He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur.

With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle.

Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.

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