Bitcoin Futures Bearish on CME’s Debut

Bitcoin broke into unchartered territory on Sunday, ahead of the launch of the CME Group’s Bitcoin futures market, with investors looking to position ahead of a likely upbeat value on the first contracts rolling out.

While the CME Group’s January contract opened well above Bitcoin’s valuation at the time, with a January expiry opening price of $20,650, things turned bearish soon after, with the January contract falling to an intraday low $18,345 before recovering to $19,215 at the time of writing.

It certainly wasn’t the fanfare that the markets had anticipated, leaving Bitcoin range bound through the early part of the day, down 0.89% to 18,784.98 at the time of writing.

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It wasn’t all bad, with Bitcoin’s CBE Group February contract sitting at $20,000, having recovered from an intraday low $19,600, with the March contract leading the way, sitting at $20,030 at the time of writing.

Unsurprisingly, trading volumes are significantly heavier on the January contract, with volumes for February, March and June particularly light.

Focus will be on the direction of the January contract and with the price decline from today’s open, pressure will likely remain on Bitcoin through the day as the markets look to gauge the degree of influence the Bitcoin futures markets will have on Bitcoin’s value.

Interestingly the January contracts have already diverged between the two exchanges, with the Cboe’s January contract valued at $19,030 at the time of writing.

Volumes on the Cboe exchange are currently on the higher side, with the CME Group’s Bitcoin futures having just launched, but we will expect trading volumes on the CME platform to catch up relatively quickly.

The good news for the CME Group is that there is greater activity with the CME launch, though volumes are generally on the lighter side with institutional investors testing the waters early on.

Time will tell whether the banks’ claims that it is too early for a Bitcoin futures market was a correct call, but one thing is for certain, volumes will need to pick up across the various contracts on both exchanges for the futures market to provide any guidance to Bitcoin investors going forward.

With Bitcoin on the back foot, pressured by the fall in its January futures contract price, Litecoin has also been under pressure, with Litecoin down 2.99% at $315.02 at the time of writing. Bitcoin’s going to need to face some more bad press for Litecoin to break new records, following last week’s rally.

While we won’t expect the CME Group and Cboe futures markets to have an impact on the likes of Ripple, Litecoin could well find itself under the influence, particularly in the early days. It’s not clear yet whether today’s bearish sentiment towards Bitcoin value on the futures market is purely a view on Bitcoin or on the cryptocurrency market as a whole.

For now January futures contracts are sitting above Bitcoin’s current value, which will provide some support to Bitcoin, though how the week unfolds will be pivotal in bringing Bitcoin more into the mainstream as an asset class.

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