Bitcoin on CME

Everyone seems excited that Bitcoin is getting recognized by an established player when the CME (Chicago Mercantile Exchange) launches Bitcoin futures by the end of the year.

By why are you excited?

Have you thought through what this means?

Right now, if you are an actual professional large-scale investor, to be into Bitcoin is to buy or sell it. Realistically you cannot play in the derivatives market. Why not? Because of counter-party risk. As a large investor you do not enter into derivatives with small fly-by-wire outfits. If you successfully take the right derivatives position, there is no trust that the counter-party position is adequately covered.

Therefore there is no derivatives trading of a meaningful size right now.

With Bitcoin futures on CME this will change drastically.

With a professional player suddenly stepping up, it will become meaningful for the major players to suddenly take out massive short positions. A, presto, the crash becomes a reality.