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Gemini Exchange Added to CME Group’s Pioneering Crypto Benchmarks

The Winklevoss twins’ Gemini platform is being added as a constituent exchange for the Chicago Mercantile Exchange’s cryptocurrency reference rates.

The Winklevoss twins’ Gemini platform is being added as a constituent exchange for the Chicago Mercantile Exchange (CME Group)’s cryptocurrency reference rates.

As revealed in an official tweet from CME Group on Aug. 8, Gemini will be included in four major crypto pricing indices as of Aug. 30.

CME Group Bitcoin, Ether Indices

As reported, CME Group launched its first two crypto pricing products — the standardized reference rate “CME CF Bitcoin Reference Rate” and the spot index “CME CF Bitcoin Real-Time Index” — back in November 2016. 

Both were heralded as major stepping stones toward the professionalization of Bitcoin (BTC) trading and the acceptance of the asset by stalwart traditional trading giants.

In March 2018, the Group launched two analogous products for Ether (ETH): the “CME CF Ether-Dollar Reference Rate” and “CME CF Ether Real Time Index” in partnership with United Kingdom-based crypto futures-focused exchange Crypto Facilities.

Ahead of the addition of Gemini, these pricing products drew on transactions and order book activity data from major industry trading platforms such as Bitstamp, Coinbase, itBit and Kraken (Coinbase is, however, not cited in relation to CME Group’s Ether products). 

Crypto index fever

CME Group was notably preceded by the New York Stock Exchange’s NYSE Bitcoin Index, which went live in May 2015 — a product that NYSE operator Intercontinental Exchange (ICE) claimed was the first-ever exchange-calculated and disseminated Bitcoin index.

Since these early offerings, crypto pricing products — many targeting institutional clients — have become increasingly more sophisticated and widespread. 

This June, the half a million traditional traders using the Reuters and Bloomberg financial terminals were provided with access to a new AI-powered index for the 100 strongest-performing cryptocurrencies and tokens.

London-based crypto data provider CryptoCompare launched an Exchange Benchmark product this year ranking over 100 global crypto spot exchanges worldwide, having previously announced a partnership with Nasdaq to release a new crypto pricing product, as well as a joint venture with BitMEX to build a crypto futures dataset.

At the end of April, Nasdaq introduced XRP Liquid Index (XRRLX) to its global data service. Nasdaq had previously begun listing Brave New Coin’s Bitcoin Liquid Index and Ethereum Liquid Index.

In March, CoinMarketCap announced the launch of two cryptocurrency benchmark indices on Nasdaq Global Index Data Service, Bloomberg Terminal, Thomson Reuters Eikon and Börse Stuttgart.

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CME Bitcoin Market Has Record Month, Could Boost BTC High

CME’s Crypto Market Sees Massive June

According to a recent report from CoinDesk, Bitcoin futures on the CME — one of the world’s leading derivatives market — saw a stellar June. The Chicago-based platform’s BTC-related vehicles were traded by over 2,960 accounts, most of which are purported to be hedge funds, large investors, institutional players, and cryptocurrency funds/miners.

This massive number of investors utilizing the CME’s Bitcoin amenities — the highest to-date — coincided with a 30% surge in account sign-ups, clearly accentuating that the asset’s recovery to $10,000 is driving investors back into BTC. Year-to-date, the CME has registered 1,000 new accounts to trade Bitcoin futures.

Also, the amount of open interest in the CME’s Bitcoin futures hit 6,069 contracts, amounting to over 30,000 BTC. And the number of clients holding over 5 contracts moved from 46 to 49 over June, implying that bigger investors are starting to trickle back into the cryptocurrency ecosystem.

Bitcoin Could Surge Off Renewed Institutional Interest

While it isn’t clear how futures trading has affected the value of Bitcoin, Mike Novogratz has suggested that renewed institutional interest will be a primary catalyst for BTC to head higher, potentially to $20,000 and beyond.

As reported by Ethereum World News, the former Wall Street hedge fund manager on Tuesday explained what he thinks will be a massive boon for Bitcoin in the years to come. This is, of course, institutional involvement. Novogratz told Bloomberg:

“I’m not selling the next time we hit $14,000. The second time we reach that level, [there may be] a move to $20,000. I don’t expect this to happen in the next few weeks: I don’t expect it to the middle or the end of the fourth quarter. But the next wave will come when the institutions — the state of X, Texas Teachers Union, and those guys — come in, and then you will see Bitcoin hit $20,000 and higher.”

The aforementioned CME data suggests that institutions are already well on their way back into this space. What’s more, upstart cryptocurrency exchanges backed by Wall Street giants, namely ErisX, LedgerX, and the New York Stock Exchange’s Bakkt, have secured the proper licenses from American financial regulators to soon list Bitcoin-backed vehicles.

Also, TD Ameritrade and supposedly E*Trade, two leading brokers in the U.S., are soon expected to launch spot cryptocurrency trading, which many say will give retail and institutional investors alike a regulated, trusted way to siphon money into Bitcoin. As Novogratz explained:

“You can buy bitcoin on your TD Ameritrade trading account. That’s a big deal because the general population has not signed up and got a Coinbase or Circle wallet yet. We are going to see in the next three to eighteen months more ways to buy bitcoin.”

Whether or not this translates into positive price action isn’t clear just yet. But one thing is for certain: big corporations are eyeing Bitcoin, and seem poised to want to capture demand from a retail audience.

Photo by Brad Knight on Unsplash

The post CME Bitcoin Market Has Record Month, Could Boost BTC High appeared first on Ethereum World News.

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CME Bitcoin Futures Briefly Broke $10,000 Amidst a New Open Interest All-Time High

Bitcoin futures briefly exceeded $10,000 on the Chicago Mercantile Exchange for the first time since early March 2018.

Bitcoin (BTC) futures on the Chicago Mercantile Exchange’s (CME) briefly broke $10,000 on Friday, June 21, according to data from trading analytics platform TradingView.

CME bitcoin futures 24-hour chart. Source: TradingView

CME bitcoin futures 24-hour chart. Source: TradingView

BTC futures reached a new high for 2019 of around $10,050, breaking $10,000 for the first time since early March 2018, when bitcoin was trading above $11,000 per coin.

The new 2019 record has grown in line with the new highs of CME bitcoin futures total open interest (OI) that has reportedly reached around $273 million after CME reported new all-time high of 5,311 contracts totalling $256 million earlier this week. At the time, CME stressed that the OI spike came amid increased popularity from institutional investors.

Open interest rate on CME bitcoin futures. Source: ZeroHedge

Open interest rate on CME bitcoin futures. Source: ZeroHedge

A Bitcoin futures contract is an agreement to purchase or sell bitcoin on a specific future date at a specific price. CME Group became the second global exchange to list bitcoin futures for trading back in December 2017, a week after the launch of BTC futures by the Chicago Board Options Exchange (CBOE). In March 2019, CBOE announced that they will not add a new BTC futures market, citing re-evaluation of its approach to trading digital assets.

Meanwhile, CME has seen notable growth in bitcoin futures trading on its platform recently, having recorded a new all-time high in the number of open contracts in early June. Earlier in May, CME reported that it was about to record the biggest trading month for BTC futures trading.

While BTC futures trading on CME surpassed the $10,000 mark, bitcoin’s price has been firmly approaching the same threshold recently. At press time, bitcoin is trading at $9,862, slightly down from the intraday high of $9,893.

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CME: Open Interest in Bitcoin Futures Contracts Hit All-Time High

Open interest in Bitcoin futures contracts on CME hit a new all-time high of over 5,300 contracts, purportedly due to increased institutional interest.

The Chicago Mercantile Exchange (CME) Group has released data showing that open interest in Bitcoin futures is rising, as per an official Twitter post on June 18.

Interest in BTC futures over time: https://twitter.com/CMEGroup/status/1141015074062110721

Interest in BTC futures over time: https://twitter.com/CMEGroup/status/1141015074062110721

According to CME, bitcoin (BTC) open interest spiked on June 17 with an all-time high of 5,311 contracts totalling 26,555 BTC, or approximately $246 million at press time.

Futures are standardized contracts that bind a party to buying or selling some asset at a predetermined date. Notably, the CME group also remarked in the Twitter post that BTC futures appears to be gaining popularity with institutional investors.

Major United States bank JPMorgan Chase (JPM) executive Nikolaos Panigirtzoglou has also recently commented in a report on the state of bitcoin, saying that BTC markets appear to be increasingly influenced by institutional investors.

While CME is noticing increased interest and positions, the Cboe Global Markets settled its last bitcoin futures contracts at 3 p.m. Chicago time today. 

Many have speculated that Facebook’s recent cryptocurrency announcement will propel markets forward. Yesterday the social media giant released the white paper for its own stablecoin, Libra, which financial analyst Tom Lee says is evidence of mainstream interest in crypto.

BTC is currently trading around $9,290, up 2.55% on the day.

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Bloomberg: UK Interdealer Broker TP ICAP to Sell CME’s Bitcoin Futures

United Kingdom-based interdealer broker TP ICAP will sell bitcoin financial derivatives.

United Kingdom-based interdealer broker TP ICAP will sell bitcoin (BTC) financial derivatives, Bloomberg reports on June 17.

Per the report, the ICAP unit of the firm now allows its customers to buy or sell the Chicago Mercantile Exchange’s (CME) bitcoin futures. In June, the Chicago Board Options Exchange’s bitcoin futures will expire with no current plans for renewal, leaving the CME as the sole offerer of BTC futures.

TP ICAP also reportedly expects to add non-deliverable forwards tied to the largest cryptocurrency, and then plans to open desks in Asia and the United States. Bloomberg claims that the company took the decision due to a decrease of its core business model:

“Interdealer brokers have traditionally relied on handling trades for banks, but their volumes shrunk in the aftermath of the financial crisis. A profit warning last year wiped 36% from TP ICAP’s market value in a day. It’s regained about 10% since then to 1.6 billion pounds ($2 billion).”

The author of the report also points out that customers have to comply with Know Your Client and Anti-Money Laundering regulations in order to access bitcoin through the firm’s services. Furthermore, TP ICAP also reportedly considers other digital assets, such as altcoins and tokenized, to be real-world assets. Bloomberg quotes the firm’s head of digital asset market, Duncan Trenholme, illustrating the company’s interest in the industry:

“We want to be close to what’s happening within this nascent asset class because we believe it’s important to invest in the early stages of a growing market. […] TP ICAP also understands that this technology could disrupt or impact other asset classes where we currently operate, so we feel it’s important to be informed.”

According to the company’s 2018 financial results disclosure, TP ICAP reported a revenue of £1,763 billion ($2.219 billion) last year.

As Cointelegraph reported earlier today, bitcoin surpassed one million daily active addresses on June 14, according to blockchain statistics website CoinMetrics.

Earlier this week, JPMorgan Chase wrote in a report that the Bitcoin industry has changed considerably since 2017, citing an increase in institutional interest.

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Open Positions on Chicago Mercantile Exchange Bitcoin Futures Hit Record High

The number of open contracts for CME bitcoin futures is reportedly at an all-time high.

The number of open contracts for the Chicago Mercantile Exchange’s (CME) bitcoin (BTC) futures is reportedly at an all-time high, cryptocurrency news outlet Coindesk reported on June 3.

According to visible data released by the United States Commodity Futures Trading Commission (CFTC) data, the number of open positions for the aforementioned future contract in the week from May 27 to June 3 is 5,190.

Coindesk claims that this is the highest number of open positions that CME’s bitcoin futures have ever reported and a 7% increase over the previous week.

Per the report, the recent increase in futures trading activity could be a sign of increased institutional interest in bitcoin. This is a continuation of the trend lately reported by the bitcoin futures, that also saw record volume on May 13.

As Cointelegraph reported at the time, CME’s bitcoin futures were also expected to hit new heights in May. CME  purportedly revealed that the average daily bitcoin futures trading volume hit a new high of 14,000 contracts in May 2019.

An unnamed official allegedly said at the beginning of last month that the CFTC is open to the idea of ether (ETH) futures trading, should the product meet the CFTC’s various requirements.

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May to Become Strongest Month for CME’s Bitcoin Futures Trading: Report

The Chicago Mercantile Exchange reportedly said that the scale of bitcoin futures trading has continued to hit new highs in May.

CME Group, the second global exchange to list bitcoin (BTC) futures, is about to record the biggest trading month for BTC futures trading, industry news outlet The Block reports May 21. The publication has reportedly cited data from an external email from CME.

The Chicago Mercantile Exchange purportedly revealed that the average daily bitcoin futures trading volume hit a new high of 14,000 contracts solely in May 2019.

To date, May 13 has reportedly become the biggest trading day for CME’s bitcoin futures, with the platform having registered 33,700 contracts worth $1.35 billion in bitcoin at the time. The exchange also revealed that the number of BTC futures trading accounts has hit more than 2,500.

In the report, CME has also summarized its total bitcoin futures trading results, claiming that the exchange has traded more than 1.6 million contracts since it was launched in December 2017, which accounts for over $50 billion in notional value.

As previously reported, CME Group had seen a massive growth of bitcoin futures trades on May 13, which represented a 50% spike versus the previous high on April 4. On the other hand, the exchange previously revealed that its net income dropped 17% in Q1 2019 despite rising revenues.

Crypto markets have recently seen the first major bullish move in 2019, with bitcoin surging from an average price point of $4,000 to above $8,000 starting from April 1, according to data from CoinMarketCap.

Earlier today, Cointelegraph reported that major Japanese crypto exchanges, including Bitpoint, DMM Bitcoin and Coincheck, have registered a 200% surge of new account signups since the end of March 2019.

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Study: Bitcoin Derivatives Exchanges Register Record Trading Volumes

According to Diar’s recent report, institutional traders have registered record high volumes on bitcoin derivatives exchanges.

Cryptocurrency research firm Diar has indicated that institutional traders recently registered record high volumes on bitcoin (BTC) derivatives exchanges in a report published on May 21.

Per the report, bitcoin derivatives trading on the Chicago Mercantile Exchange (CME) hit an all-time-high for two months in a row.

Bitcoin derivatives trading volume on CME. Source: Diar

Cryptocurrency exchange BitMEX is reportedly also seeing much of the same trading volumes because of recent volatility in the digital assets market, while Dutch bitcoin futures and options exchange Deribit has seen a more institution-based audience. According to Diar, Deribit has been hitting record volumes month-on-month.

Regarding physically-settled bitcoin futures, physically delivered cryptocurrency futures exchange CoinFLEX has witnessed interest from crypto venture capital firm Digital Currency Group and investment company Polychain, which have reportedly already launched two future contracts.

As reported earlier this month, CME Group reported record volume for its bitcoin futures on May 13 as the cryptocurrency’s surprise bull market continued. On May 13, the exchange saw an all-time record of 33,700 contracts. That figure represented an equivalent 168,000 BTC ($1.35 billion) — an almost 50% rise versus the previous high of 22,500 contracts and 112,700 BTC (currently $909.2 million) on April 4.

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CME Group Bitcoin Futures Hit $1.3 Billion Amid Parabolic Advance

Bitcoin’s intense price gains have sparked frenzied activity for CME’s product, which set a previous high last month.

CME Group reported record volume for its bitcoin (BTC) futures on May 13 as the cryptocurrency’s surprise bull market continued.

CME, which together with the Chicago Board Options Exchange (CBOE) became the first provider of bitcoin futures to the market in December 2017, saw an all-time record of 33,700 contracts on Monday.

That figure represented an equivalent 168,000 BTC ($1.35 billion) — an almost 50% rise versus the previous high of 22,500 contracts and 112,700 BTC (currently $909.2 million) on April 4.

At the time, CME had warned over a 17% net income drop for Q1 2019 despite the brisk bitcoin activity.

Bitcoin’s most recent seven-week bull run began to gather speed on April 1: on Tuesday, the largest cryptocurrency set a yearly high of $8,335.

Bitcoin’s own trading volumes similarly set separate daily records, with two days of back-to-back historic highs occurring this week.

CME, meanwhile, has called for increased regulatory participation in cryptocurrency, arguing that involvement of authorities is essential if the phenomenon is to be a success.

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ErisX’s Spot Market: More Institutional Participation and Regulatory Oversight Coming to Crypto?

ErisX’s spot market could increase institutional participation — as well as regulatory oversight.

United States-based cryptocurrency exchange ErisX recently announced the public launch of its spot market trading, a move that takes the company a step closer to its goal of being a one-stop shop for the trading of spot and futures contracts in a regulated environment.

Per the information on its product page, ErisX will support dollar trading pair with bitcoin, bitcoin cash, ether and litecoin — in addition to bitcoin trading pairs with the other three cryptocurrencies.

What’s ErisX’s plan in the crypto space?

Since 2017, ErisX has been building a trusted market infrastructure to support the institutional adoption of cryptocurrency.

The Chicago-based company wants to make it possible for players in the capital market to have access to digital assets in the same way — and perhaps at the same venue — that they access traditional financial products like securities. Just before the end of April, there were reports that TD Ameritrade, which has some 11 million retail clients, has been testing ErisX’s crypto exchange and could soon offer crypto trading on its platform, where clients already trade traditional financial products.

Beyond crypto spot market, which is what most existing crypto exchanges offer and is also what ErisX’s spot trading is about, ErisX plans to launch a derivatives exchange once the U.S. Commodity Futures Trading Commission (CFTC) approves its application to operate both a derivatives exchange and a clearing house.

As a quick refresher, a spot market is a trading venue — digital or otherwise — where financial instruments such as securities, commodities and currencies are traded for on-the-spot delivery. Delivery means the exchange of cash for the financial instrument in question. Therefore, a crypto spot market would be any venue, such as exchanges, where you can instantly trade cryptocurrencies.

How will the ErisX platform work?

Trading on the ErisX spot market will work pretty much like existing exchanges like Coinbase. Users will need to go through Know Your Customer (KYC), Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) compliance checks before they’re able to use ErisX’s platform. Traditional brokerage firms already do this when onboarding users that trade through brokerage platforms and may not have to repeat the process.

Like other U.S.-based crypto exchanges, ErisX has licenses that make it possible for it to support the trading of a USD/crypto pair.

Why is ErisX attracting institutional investors?

Following the closing of the third round of Series B funding, which the company announced alongside the launch of its spot market exchange, ErisX has now raised a total of $47.5 million from 22 investors, according to business information platform Crunchbase.

These investors — which include TD Ameritrade, DRW Holdings, CBOE, TradeStation and Nasdaq, just to name a few — are interested in ErisX for a few reasons, all of which sum up to the fact that they see promise in how the crypto exchange is building a robust, transparent, integrated and regulatory-compliant market infrastructure in the crypto space.

TradeStation, an American online securities and futures brokerage company, invested in ErisX because it believes ErisX is bridging the gap between the traditional and crypto market. John Bartleman, president of TradeStation Group, in a press release, said:

“TradeStation is actively working to help bridge the gap between traditional markets and crypto markets. Our investment in ErisX supports further advances in the crypto market structure and will help bring more established players into the space. Supporting firms like ErisX, that understand regulation and markets, benefits the crypto ecosystem.”

TD Ameritrade, on the other hand, has seen increasing demand for the trading of crypto products from its retail customers. So, the American brokerage firm invested in ErisX because it sees the crypto exchange operator as a viable avenue to offer its customers access to the crypto market in a transparent way. Tim Hockey, CEO of TD Ameritrade said:

“As investors in ErisX, as well as a strategic contributor in the initiative, we are looking forward to advancing our innovation goals by working with an established, CFTC-regulated exchange that will include digital asset futures and spot contracts on a single platform.”

Steve Quirk, executive vice president of Trading & Education at TD Ameritrade, added that:

“Our retail clients are seeking to access and trade digital currency products in the same way they do with traditional capital markets — through a legitimate, regulated and transparent exchange. That’s precisely why we chose to invest in ErisX — to make digital currency products more accessible to retail clients.”

While U.S.-regulated exchanges including Coinbase and Gemini already offer institutional trading products in some ways, their services don’t cover the extensive needs of institutional investors. Institutional investors typically use leverage tactics to hedge or optimize their portfolio returns through derivatives. Some popular derivatives include futures, options, swaps, warrants, and contracts for difference.

U.S.-based derivatives market operators CBOE Global Markets and CME Group were the first to offer cash-settled crypto futures. While CBOE discontinued its bitcoin futures offering in March, industry market intelligence provider Diar pointed at volume data to suggest that CBOE was struggling to compete adequately with CME. CME continues to offer bitcoin futures, with volumes reportedly growing on a monthly basis.

However, investors and traders want a futures market for physical bitcoin settlement.

In this context, physical bitcoin is the same thing as the bitcoin in your wallet. “Physical” is only a relative term to indicate that actual bitcoin is being traded for cash, as opposed to trades where only cash is changing hands based on the price of bitcoin.

During a meeting with the CFTC on Feb. 14, 2018, Richard Gorelick, the head of market structure at the trading firm DRW, said:

“We continue to have concerns that the way these futures contracts are pegged to these cash markets, which are less transparent, could result in dislocations in the future. We’ve expressed our view that we would like to see physically settled cryptoasset contracts to help deal with some of these concerns.”

Cointelegraph had reported in June 2018 about possible manipulation of bitcoin prices for gains in the bitcoin futures market. In addition to the risk of manipulation, contracts are inefficient for professional traders who also actively trade cryptocurrency.

Garrett See of crypto trading firm DV Chain told the Business Insider:

“If they are physical delivery futures, then I know exactly what my P&L [profit and loss] will be if I hold it to expiration. If they’re cash settled, I have to make another trade to unwind the spot position at expiration and I have to hope that I can unwind my position at the expiration price (including fees) even though I may not have the ability to trade on the exchanges that are being used to determine settlement price.”

The futures products for physical settlement being developed by ErisX — as well as by its competitor, Bakkt — will meet the needs of institutional investors.

Bakkt is a crypto exchange platform being developed by Intercontinental Exchange, the parent company of the New York Stock Exchange. Similar to ErisX, Bakkt is developing both crypto spot and futures market. Beyond creating a market infrastructure that attracts institutional players, Bakkt wants to build and develop crypto use cases, according to Bakkt’s chief operating officer Adam White.

Following Bakkt’s announcement of a futures market for physical bitcoin settlement last year, See told Business Insider:

“If bitcoin is trading at a discount in the spot market relative to the futures market, a trader can go long bitcoin and short the future for a profit. This is hard when a future settles in cash because it requires a trader to make another trade.”

A more transparent crypto spot market

The CFTC last year reportedly requested trading data from top exchanges, following reports that the spot market might have been manipulated for gains in the futures market.

The introduction of even more advanced futures products, like the ones ErisX and Bakkt are working on, could result in more regulatory oversight of the spot exchange operators. The increased attention could, in turn, drive the exchanges toward maintaining the best and most transparent exchange practices.