On Wednesday morning, Bitcoin hit a new high of $6,612, just hours after it broke the $6,400 barrier. The cryptocurrency has seen some huge increases lately, but not everyone is delighted that Bitcoin has gain such speed, says Fortune.
Sometimes is hard to tell why Bitcoin is conquering peaks after peaks, but this time its rose is due to CME’s announcement on Tuesday that plans to introduce Bitcoin futures contracts by the end of the year, just after regulatory approval.
Will everything go as planned?
Basically, futures are a bet on a market’s trajectory. Sometimes it’s luck, other times is knowledge, nobody is ever sure that things always go according to plan.
This is how futures contracts work – the buyer pays now for a commodity that they will only receive at an agreed later date, meaning that if the commodity goes up in value by the delivery date, the buyer ends up a winner; if it goes down, their account suffers a blow.
With CME being the world’s biggest marketplace for this type of contracts, it’s expected for more institutional investors to take their chance on the Bitcoin market.
“CME Group is the natural home for this new vehicle that will provide investors with transparency, price discovery and risk transfer capabilities,” said CME Group chief Terry Duffy. The contracts will be settled in cash, at the CME CF Bitcoin reference rate.
People are surprised by CMR’s move
However, not everyone is happy about the American financial market company’s decision. Themis Trading principle Joe Saluzzi is one of those people. He pointed out how unregulated the underlying Bitcoin exchanges are and acted surprised why CME chose to go for this business.
Saluzzi also said that he likes the concept of Bitcoin, but his main issue is “that on Wall Street the innovators are trying to package something up and put a derivative label on it when they really don’t know what’s underneath.”