LONDON: Bitcoin has moved another step towards mainstream investing with the start of trading on the huge Chicago Mercantile Exchange financial futures market. It comes as the value of the digital currency approached $20,000 on Sunday, before drifting below $19,000. Last week, Chicago’s CBOE exchange began Bitcoin futures trading bets on a future price – but CME is far bigger.
On Sunday, the chairman of UBS bank and former Bundesbank head Axel Weber joined the chorus of Bitcoin warnings.
“Bitcoin is not money,” he said in an interview, and urged regulators to intervene.
Meanwhile the French finance minister, Bruno Le Maire, has called for the issue to be discussed at the G20 summit of major economies in April.
“There is evidently a risk of speculation. We need to consider and examine this and see how… with all the other G20 members we can regulate bitcoin”, Mr Maire told the French news channel LCI.
Bitcoin prices have surged this year: a single bitcoin stood at less than $1,000 in January and hit a record $19,783 on Sunday, according to Coindesk.
Analysts believe CME’s entry into the Bitcoin market will generate more interest in the crypto-currency, possibly pushing the price higher.
The CBOE futures contract is based on a closing price of Bitcoin from the Gemini exchange, which is owned and operated by virtual currency entrepreneurs and brothers Cameron and Tyler Winklevoss.
However, the CME contract price will be culled from multiple exchanges, potentially offering investors more transparency about the value.
“The CME [futures] contract is based on a broader array of exchanges,” said Matt Osborne, chief investment officer of Altegris, which has $2.5bn in alternative investments.
“So there is a possibility that the CME contract may generate more interest and more volume.
“Volumes are going to slowly increase as professional traders get comfortable with the price action and more importantly get comfortable with the volatility.”
Institutional investors are prohibited from buying Bitcoin directly because the market is unregulated, but they can buy futures contracts.
