First CME Bitcoin Futures Contract Expires On 26 January, 2018

On January 26, 2018, the initial CME Bitcoin Futures contract Expires that raises a huge question, if the cryptocurrency market is going to fall down even more. This has been followed by the expiry of CBOE contract on Jan 17, 2018, that resulted in its downward slide by 36 percent.

CME Bitcoin futures contract will Boom or Bust Tomorrow?

Chicago Mercantile Exchange & Chicago Board of Trade (CME) is the world’s largest future exchange that launched its own bitcoin futures contract in December, last year. The future contracts are under the ticker BTC whose pre-decided expiry date is on January 26, 2018. The product had opened at $20,650 that initially traded quite high.

Where CBOE contract represents only one bitcoin, CME future contract represents five bitcoins. Moreover, CME uses its own bitcoin reference rate that basically tracks several cryptocurrency exchanges, unlike CBOE that settles its futures against the daily price auction of Gemini. Bitcoin future is also different from bitcoin exchange as futures will have a defined trading window and the circuit filters. Furthermore, CME brings the options to short bitcoin.

A little rundown of CME future contracts

The Chicago Merc (CME) futures contract started with the idea that it will use the ticker BTC and equal five bitcoins. The CME’s contract is priced off of the CME Bitcoin Reference Rate which is an index that takes the pricing data reference from cryptocurrency exchanges that involves GDAX, Kraken, itBit, and Bitstamp.

The BTC of CME is traded on CME Globex between 6 pm to 5 pm from Sunday to Friday along with Easter time that begins at 5 pm. The contract clears through CME Clear Port and has 43 percent of initial margin rate and maintenance rate each. As for the trading, it is not allowed outside 20 percent price limit whereas the margin rates are subject to change.

CBOE future contracts expiration resulted in 36% downward slide

In the first month of Chicago Board Options Exchange (CBOE), bitcoin futures got mixed results. On January 17, 2018, when CBOE contracts expired, the value of the bitcoin took a stumble of 36 percent in spot pricing. Since CBOE got entry into the market, bitcoins have given up a quarter of its value.

According to the reports, on Jan 17, the first bitcoin future contract closed at $10,900. The time the first batch of futures closed, bitcoin had taken a significant fall. The launch of the bitcoin linked future contracts indicated that the mainstream financial institutions might also warm up to the idea of cryptocurrencies and in a broader sense. However, it is yet to be seen how exactly the future market will play out.

With the way the expire of CBOE future contracts’ expiration negatively affected the bitcoin market, it is likely the expiration of CME tomorrow will see a downward spiral too. However, it’s just a calculated guess by seeing the past behaviour of CBOE future contracts.

What do you think will be the effect of the CME Bitcoin Futures contract Expires on the market? Let us know your thought in comments below.