The Chicago Mercantile Exchange (CME) Group is arguably the world’s largest and most diverse marketplace for derivatives trading. It offers a broad range of futures and options products.
Back in December 2017, CME launched its Bitcoin futures contract, allowing institutional investors to gain exposure to the price of the world’s largest cryptocurrency. During December 2017, Bitcoin recorded its all-time high at $19,800. The CME’s Bitcoin futures contract is that it is settled in cash. This means that at the end of the expiration period, the trader won’t receive actual bitcoins, but rather their cash equivalent. In other words, they can speculate on the future price of Bitcoin without having to own it, hence worrying about storage and security.
Since 2017, the volume of the traded Bitcoin futures contracts on CME has grown substantially. There is only one contract type available at the time of this writing. It contains 5 BTC and is settled once a month.
It’s also worth noting that soon after CME launched its BTC futures contract, the market tanked and entered into a prolonged bear market, which lasted throughout the entire 2018. This caused some to believe that the contracts were used to allow the institutional market to open short positions on the Bitcoin price.
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