While trading bitcoin at this moment in time is fairly easy, there are still a multitude of issues that traders have to deal with. However, the digital currency has managed to get more mainstream credibility considering the fact that the world’s largest futures exchange recently announced the launch of a pair of indexes, meant to track the price of the digital currency.
Based on this, these gauges, released by the CME Group Inc. could actually be used later on as building blocks for a variety of futures contracts, which would make it considerably easier for individuals and professional investors to engage in bitcoin trading. According to Daniel masters, the CIO at Global Advisors Lth, and who happens to manage around $25 million worth of assets in bitcoin, these indexes are ‘clear precursors to a listing of some kind (…) There is tremendous pent-up demand in the U.S. for bitcoin exposure that doesn’t require an investor to select one of the current bitcoin exchanges in order to invest.”
Understanding why bitcoin trading can be a bit tricky is essential to grasping the importance of these contracts, and possible bitcoin-based futures trading. With this in mind, U.S. brokerages don’t offer a way to trade bitcoin, which is why most people are required to set up exchange accounts and deal with trading that way. Many of these exchanges are strictly regulated, and there are limitations set in place, yet if the CME launch exchange gets tied to bitcoin, then trading would in fact, be considerably easier. This is so mostly due to the fact that trading digital currencies would become similar to normal trading of commodities or sticks.
However, the decision to enter this market by the CME group is quite debatable, considering the fact that in the past, bitcoin has been linked to criminality, terrorism and the black market. Some economical analysts believe that the CME could actually risk its reputation, by also teaming up with a variety of both small and big bitcoin exchanges. Regulatory scrutiny could also have a word to say, as numerous bitcoin exchanges have been hacked in the past.
Regardless of this, in an effort to stop these claims, a spokesperson for CME stated that: “Our products launched will bring greater transparency to the bitcoin market (…) we have a long history of developing nascent markets across asset classes for this same reason.”
Nevertheless, the company refused to comment on whether they are in fact planning to launch bitcoin futures trading, or are just looking for a way to get involved with the digital currency.
Based on everything that has been outlined so far, Bitcoin-based futures trading would allow for an increase in trading activity, thus also playing an important role in raising the bitcoin price.