What will be the effect of Bitcoin trading on the CME?

[triads]

Just a couple of weeks ago, Bitcoin futures started trading on the Chicago Mercantile Exchange.  For those that don't know, this is one of the largest single exchanges for derivatives in the world.  Stock indices, energy futures (e.g. crude oil), forex (Euro, Pound, Yen), bonds... you name it and it's traded on the CME.

What do you think the effect on Bitcoin will be?  Price-wise?  Short term and long term?  How about on BTC's image... will it legitimate cryptos?  Perhaps that might lead to investment funds adding Bitcoin to their portfolios??

[SamReomo]

I actually never heard about them, but the news seems very positive and exciting. What I think is that, the Bitcoin will get more investors from such exchanges. There investors might be the ones who could easily invest million into the Bitcoin. That would be really awesome for its image because the more investors into the community will increase its value without any second thought.

[pooya87]

it may not exactly legitimize cryptos but it is not ineffective either. for example when people see someplace this big and legit added bitcoin and then they see some idiot like JPMorgan CEO call bitcoin fraud, they would pay less attention to that idiot after this. and that's something.

as for price it is hard to say, so far it coincided with the correction and many believed it will cause a dump (although they are wrong because of the way CME market closes when the drop is bigger than 7%) so in short term we are seeing that.
in long it will also coincide with the recovery and the rallies, and possibly because of what i said above it will help with the rise.

[jinksters09]

This actually the first time I have heard about CME and regarding its effect on it to the bitcoin cryptocurrency. I don't think that the bitcoin will legitimize just because of that because many business and companies are aware of the threat bitcoin can inflict to their company which is why they are being wary about that, and claiming that bitcoin is just another fraud or scam.

[triads]

I actually never heard about them, but the news seems very positive and exciting. What I think is that, the Bitcoin will get more investors from such exchanges. There investors might be the ones who could easily invest million into the Bitcoin. That would be really awesome for its image because the more investors into the community will increase its value without any second thought.

Agreed... I think it will add an air of legitimacy. More investors will actually think of Bitcoin as a real asset class.

And for those that don't know the CME... it's a monster!  The entire world of options and futures is pretty much run out of "The Merc", as it's called. The group is over 100 years old and is most known for open outcry pits (the old videos where you see people in multi colored jackets waving furiously and shouting out orders). Nowadays, most of those are gone and trading is largely electronic.

Daily trading volumes on the CME are around easily over $1 trillion in value. In comparison, a typical 24 hr trade volume for Bitcoin is about $1 - $2 billion.

[fiulpro]

It will for sure legitimate cryptocurrencies, since most of the trading is gonna take place in money therefore it won't directly effect the proce of bitcoins also, we all know that big whales have casted out of bitcoins and adopted bitcoins cash but still bitcoins is on a descent price thus I do think that its because of the CME , and the long term effects can be quite harmful if someday they decided to end this project then a huge sum of Money will be widrawn out moreorso it will be an end for bitcoins, it does give them a strong authority over it.

[triads]

[...] the long term effects can be quite harmful if someday they decided to end this project then a huge sum of Money will be widrawn out moreorso it will be an end for bitcoins, it does give them a strong authority over it.

It's actually more significant than just "withdrawing money". Most people don't know this, but CME Bitcoin futures actually allow traders to "go short". That means they can essentially own -1 Bitcoins. So now, they make money if Bitcoin goes down and lose money if Bitcoin goes up.

Being able to "go short" is a massive change to the market dynamics of Bitcoin. Previously, the only downward pressure on the price of Bitcoin were sellers. But those sellers were previously buyers. Now, with CME futures, traders can exert downward pressure on Bitcoin without ever having first bought it!  Maybe this explains the recent drop in price??

[HabBear]

What do you think the effect on Bitcoin will be?  Price-wise?  Short term and long term?  How about on BTC's image... will it legitimate cryptos?  Perhaps that might lead to investment funds adding Bitcoin to their portfolios??

It brings awareness and legitimacy to Bitcoin...and a very select few other cryptocurrencies.

Price wise there isn't a direct correlation between the futures exchange and the blockchain. The futures contracts, the betting, happens on the CME or CBOT exchanges only. Those contracts never hit the blockchain, therefore they can't directly influence the price of Bitcoin.

Additionally, the firms or big investors need to hold reserve Bitcoin to back the trades or market they're making. That could have explained the price run-up before the first issuance of the contracts on each exchange.

The biggest thing that would lead investment firms to add Bitcoin to their portfolios is the 10+ fold increase in price in 2017...none of that was related to the futures contracts.

Being able to "go short" is a massive change to the market dynamics of Bitcoin. Previously, the only downward pressure on the price of Bitcoin were sellers. But those sellers were previously buyers. Now, with CME futures, traders can exert downward pressure on Bitcoin without ever having first bought it!

Instead of applying undue FUD, please explain to us how betting against the market on the CME or CBOT will drive down the price of actual Bitcoin?

[Juggy777]

Just a couple of weeks ago, Bitcoin futures started trading on the Chicago Mercantile Exchange.  For those that don't know, this is one of the largest single exchanges for derivatives in the world.  Stock indices, energy futures (e.g. crude oil), forex (Euro, Pound, Yen), bonds... you name it and it's traded on the CME.

What do you think the effect on Bitcoin will be?  Price-wise?  Short term and long term?  How about on BTC's image... will it legitimate cryptos?  Perhaps that might lead to investment funds adding Bitcoin to their portfolios??

Well I'll begin with the positives, it has brought global attention to bitcoin's, has woken up the greedy corporates that are now parking their money in btc. It has opened the way for btc etf. Coming to the negative's it has brought Bitcoin's under tremendous scrutiny, Bitcoin has gone into the hands of the corporate who can make it dance to their tune. The world leaders are upset because of this. I feel this has messed up the coin.

[coin_1122]

Still, can't completely justify after listing in CME because Bitcoin price has increased a lot in the market and now the correction is being made on it. One more thing now it can't increase like before because there many big traders in CME and they might dump the coin.

[malikusama]

Not sure whether it will cause a remarkable effect over the bitcoin price or it will be just a slight one, but surely there will be some sort of positive effect on the market because CME is one of the leading and popular market companies (exchanges) of the world having most diverse trading options, and the effect is for long term as far as i am seeing it.
Well Digital currency market is wide spreading, of course Bitcoin is the face of cryptos and as bitcoin is earning popularity among the traders around the world, it paves way for other cryptos too, because majority of the cryptos are following bitcoin's footprint.

[triads]

Not sure whether it will cause a remarkable effect over the bitcoin price or it will be just a slight one, but surely there will be some sort of positive effect on the market because CME is one of the leading and popular market companies (exchanges) of the world having most diverse trading options, and the effect is for long term as far as i am seeing it.
Well Digital currency market is wide spreading, of course Bitcoin is the face of cryptos and as bitcoin is earning popularity among the traders around the world, it paves way for other cryptos too, because majority of the cryptos are following bitcoin's footprint.

It's easy to forget that the average person doesn't know "how to access Bitcoin". Meaning, they don't know how to buy, hold, or sell it. Of course you can always just do an online search and learn how. But then there's a question of trust. Before they go wiring their cash to some exchange they've never heard of, there's got to be a concern about legitimacy.

The CME listing solves that problem. By having a widely-recognized exchange with a long history of integrity, new buyers (and sellers) can access Bitcoin with confidence.

[RamonBTC]

It add up to the marketing value of bitcoin and cryptocurrency as a whole. Exposure to any given exchanges for a certain country or origin can also help big on advertising factors that may lead for new joining member to the community. I may not know a lot about that specific CME exchange but surely enough if the bitcoin future enter that maybe they’re significantly a worthy place.

[triads]

Another effect of CME futures is leverage. The current price of bitcoin is about $16,000. In any other exchange, the only way to buy one bitcoin is to pony up $16,000.

Not so with CME futures! You only have to put up 43% of the current price as 'margin'. That means CME traders can go long 1 bitcoin by only putting down $6880. Theoretically, you can buy 2.3X the number of bitcoins for a given dollar by using futures. That magnifies both the upside and the downside risks.  (As if Bitcoin wasn't volatile enough!)