Cryptocurrency’s move to greater acceptance and legitimacy lurches forward. Bitcoin recently gained a new proponent. Intercontinental Exchange recently offered a Bitcoin futures contract. The idea here is to draw in “on-the-bubble” cryptocurrency traders. Some people maintain reservations about trading in cryptocurrency, but they aren’t solid “no’s” about doing so. International Exchange thinks its new contract can reach some of those traders.
And International Exchange isn’t a small company by any means. International Exchange owns the New York Stock Exchange. The company’s name behind the new contract establishes credibility; a trait traders seek when putting their money into anything.
Credibility doesn’t translate into automatic profits, though. IBM, Coca-Cola, and McDonald’s are legitimate, credible companies. No guarantees exist about whether their stock prices go up or down. And these blue-chip stocks come with less volatility than cryptocurrency.
Of course, a segment of traders does embrace risk. They might be willing to put funds into highly volatile investment vehicles. Bitcoin may reflect a risky investment with potentially high profits, but past catastrophic drops did occur in the past.
Interestingly, the settlement payouts with this contract deliver in Bitcoin. The CME Group offers a digital currency contract, but it pays out in cash. Perhaps Intercontinental Exchange the firm it backs, Bakkt, seek a psychological advantage here. By issuing settlement in Bitcoin, it appears the entities have great faith in Bitcoin.
In comparison, perceptions about the CME Group “running” from Bitcoin through a commitment to cash settlements might emerge. Of course, this is all perception, but perception does sway opinions and decisions.
The first futures trade saw a price of $10,115. Trading in Bitcoin through this contract won’t be for investors with limited capital. Those with enough money and a high comfort level to risk might find the contract worth examining.
In time, cryptocurrency will become more acceptable to traders. A generation familiar with Bitcoin and other assets might be young now, but the members will age into the investor class. Once they do, won’t be as adverse as previous generations towards such trading. Entities getting into the market now may become best capable of reaching these potential traders.