'Pent-Up Demand' Behind Bitcoin Futures' Launch - CME Group's CEO
The CME said on Tuesday that the new contract will be available by the end of the year, will be cash-settled, and based on the exchange’s CF Bitcoin Reference Rate, which is a one-day reference rate of Bitcoin priced in U.S. dollars.
The news sent bitcoin prices even higher, with the popular digital currency reaching a new all-time high and trading above $6,400, according to Kitco News aggregated bitcoin charts.
“We’ve seen pent-up demand by clients. [Bitcoin] is a story that hasn’t gone away [and] CME Group is looking to bring new products,” the company’s CEO Terrence Duffy told Bloomberg.
This is a reversal to CME’s previous statements not to get involved with bitcoin futures.
Duffy admits this himself: “I was not as excited about [bitcoin] at first. But if you look at how our model works, it is different from what [bitcoin] naysayers are saying.”
“Our model will be based on a regulated platform that will have risk controls, margin rules, etc. It is different from how cryptos are traded today,” he said.
When asked if bitcoin is in a bubble, Duffy replied that it wasn’t his place to speculate over the price.
“Nothing gives me pause when I look at pricing. We are supposed to manage risks, not decide what the price should be. It is not up to me to predict if it is a bubble or not,” he noted.
Duffy added that he will never participate in anything that subverts governments or financial systems. “We will bring transparency to this marketplace,” he said.
According to the CME, the cryptocurrency market capitalization has grown in recent years to $172 billion, with bitcoin representing more than 54 percent of that total, or $94 billion. The bitcoin spot market has also grown to trade roughly $1.5 billion in notional value each day.
When discussing gold and bitcoin, CME Group said that as stores of value, “many investors perceive gold and, more recently, bitcoin as second to none.”
In a report titled ‘The Evolving Economics of Bitcoin, Gold and Fiat Currencies’, the company calculated the rise of gold and bitcoin: “Since 1971, gold has appreciated from $35 per ounce to around $1,300 at the time of this writing, a gain of over 3,500%. Bitcoins have done even better. On July 19, 2010, a bitcoin was worth $0.08. At the time of this writing, it’s priced close to $5,300 per bitcoin, a gain of over 6,000,000% in seven years. Not bad!”