The announcement by the CME Group last week that it will be launching a Bitcoin futures contract is the first step in bringing legitimacy to a cryptocurrency world that, until recently, has largely remained in the shadows, mired in skepticism by much of the mainstream investment world. This move by the CME Group is a bold one, and if successful, will likely be the first in a number of products to follow that will allow investors, from individuals to institutions, the ability to participate in what many believe will be the future of transaction technology.
Due largely to a lack of understanding of Blockchain technology coupled with its early association to the dark web, Bitcoin was eschewed by many as nothing more than a passing fad. However, it has persevered, grown in popularity and its meteoric rise this year has now forced mainstream to sit up and take notice.
The action by the CME Group has the potential to elevate the cryptocurrencies as an asset class to a new level and provide investors that may have been leery, a viable option to participate via a futures contract with transparency, price discovery and risk transfer capabilities. Being backed by the world’s leading derivative marketplace could very well give Bitcoin the credibility it has lacked in the past. We are eagerly awaiting the announcement of contract specifications.