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CME traders prefer cash-liquidated Bitcoin products

May 20, 2020

Head of the Chicago Mercantile Exchange (CME) Stock and Alternative Investment Product Index (CME) According to Tim McCourt, traders prefer to trade Bitcoin in cash over physical Bitcoin products (BTC).

“So far, customers have expressed a clear preference and priority for a cash-settled product.”McCourt told Cointelegraph in an email. when asked why CME chose the cash settlement route for its Bitcoin futures trading product in 2017.

CME started its BTC futures after its price measurement

The CME opened trading in Bitcoin futures in 2017 based on the exchange’s own CF Bitcoin Reference Rate (BBR) and the Bitcoin Real Time Index (RTI) published in 2016. Essentially, These two metrics show the average Bitcoin trading price on different exchanges McCourt said it was important at different times to offer the industry a clearer price for the asset.

CME traders prefer cash-liquidated Bitcoin products
CME traders prefer cash-liquidated Bitcoin products

With CME’s Bitcoin Futures product, secured by cash, customers can trade the Bitcoin price action without owning the asset, McCourt explained, adding:

CME’s cash settlement mechanism is based on prices determined on various BTC exchanges, similar to how the SP 500 settlement mechanism is based on prices determined on centralized auction markets. “

The product is aimed at customer strategies

Customer interest has driven the introduction of CME’s cash-settled Bitcoin Futures product as cryptocurrencies have become more popular. Customers and the crypto community were very interested in futures to hedge risks or face Bitcoin prices, “said McCourt.

“The introduction of CME Bitcoin futures has created a forward curve for investors to better manage this price risk.”he added, referring to the tactics and strategies that traders and investors often use to manage their funds.

McCourt remembers the pleasant experience opening CME’s Bitcoin Futures product, apart from a similar offering launched by the Chicago Board Options Exchange (CBOE) in 2017, the first of its kind in the crypto space. CME Bitcoin futures continue to have a significant volumeWith an average of 42,500 BTC a day, the CME chief said.

The CME has recently set a number of records for its Bitcoin futures and options trading products, showing that the public is far from disinterested in the exchange’s products.

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