Bitcoin Reaches Record High of $6,600 as CME Group Announces Futures
Bitcoin hit highs of $6,600.84 today after CME Group announced plans for futures on Tuesday. The cryptocurrency shot past $6,400 to $6,500 and beyond in mere hours, according to the tracking website, CoinDesk.
If CME’s plans get regulatory approval, bitcoin will have an official futures contract on one of the biggest platforms in the world. It means that two parties will be able to exchange at an agreed upon price in the future. The move is expected to bring a wave of institutional investors, and the price is fluctuating in response.
CME also believes that bringing Bitcoin to the open market would increase stability.
“As the world’s largest regulated FX marketplace, CME Group is the natural home for this new vehicle that will provide investors with transparency, price discovery and risk transfer capabilities,” said CEO Terry Duffy.
Volatility is thought to be one of the biggest downfalls of Bitcoin as a currency, and CME’s plans would give it much-needed legitimacy. It’s another accolade for the digital currency’s hugely successful year, following increases of up to 550 percent since January.
But others believe that CME’s approval could spell danger, including Themis Trading Principal Joe Saluzzi.
“Placing a ‘futures’ market wrapper on an unregulated market to generate volume seems like a profit-oriented motive,” he said on Twitter. “Remember the CDO wrapper around all those crappy mortgages during the financial crisis? Placing a wrapper doesn’t make it safe.”
Themis trading has also said that CME ruled out the possibility only a couple of months ago. At the time, president Bryan Durkin called the currency “very nascent.”
It later reversed its decision due to high client demand, and competition might have also had an effect. However, unlike other currencies, bitcoin doesn’t have oversight from a government body. As a result, some worry about the possibility of fraud and manipulation. Its use in illegal activities such as the sale of drugs and other illegal goods has also given the currency a bad name.
Duffy weighed in on those claims to CNBC, defending the decision.
“People are looking for more efficient ways to do commerce,” he said. “Whether this is the right way or not, I’m not quite sure. But I do know one thing for sure: we are going to list the product under our rules, and if it doesn’t work, we have the ability to eliminate it.”
The negatives are also hard to see from investors’ perspective. A month ago, bitcoin was trading at highs of $4,420, and before February, the currency hadn’t reached over $1000. It’s clear that some people are getting very rich off bitcoin, and regulatory approval could give more folks a piece of that pie. Duffy believes CME’s chances are high, saying the regulator understands the application and model very well.
[Featured Image by Dan Kitwood/Getty Images]
