By Reuters
December 18, 2017

CME Group (cme), the world’s largest derivatives exchange operator, began trading bitcoin futures Sunday, with the contract opening at what is currently its session high and dropping over 6% within the first half hour.

The CME bitcoin front-month futures opened at $20,650 and have so far traded as low as $19,290 and as high as $20,650 in a session that extends into Monday.

The new contract was recently at $19,290 on CME, below the $19,500 reference price set by the exchange for the January contract.

The reference price, from which price limits are set, is $19,600 for the February contract, $19,700 for March and $19,900 for June, according to CME.

The week-old bitcoin futures contract at the Cboe was last trading at $19,280, up 6.5% on the day.

Bitcoin recently traded down 1.7% on the Bitstamp exchange at $18,640.

The launch of bitcoin futures is viewed as a major step in the digital currency’s path toward legitimacy that should ease the entry of big institutional investors.

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“We saw a nice open on light volume, but pretty uneventful so far. I do think we could certainly pick up in volume as Asia begins to open. This is a brand-new asset class and I think perhaps a lot of investors want to sit back and see how this plays out before dipping their toes in this market,” Spencer Bogart, partner at Blockchain Capital LLC, said shortly after trading began on Sunday.

Volume on CME was recently at 287 contracts. On its debut last Sunday, the Cboe traded nearly 4,000 contracts during the full session.

Bitcoin was set up in 2008 by an individual or group calling itself Satoshi Nakamoto, and was the first digital currency to successfully use cryptography to keep transactions secure and hidden, making traditional financial regulation difficult if not impossible.

Last week, Chicago-based derivatives exchange Cboe Global Markets launched bitcoin futures, which saw the price surge nearly 20% in its debut.

Some investors believe the CME bitcoin futures could attract more institutional demand because the final settlement price is culled from multiple exchanges.

The Cboe futures contract is based on a closing auction price of bitcoin from the Gemini exchange, which is owned and operated by virtual currency entrepreneurs Cameron and Tyler Winklevoss.

The general sentiment in the market remains one of caution and that has been reflected in margin requirements for the contracts.

In the futures market, margin refers to the initial deposit made into an account in order to enter into a contract.

The margin requirement at CME is 35%, while at Cboe, it is 40%, reflecting bitcoin’s volatility. The margin for an S&P 500 futures contract, by contrast, is just 5%, analysts said.

One futures trader said the average margin for brokers or intermediaries on bitcoin contracts was roughly twice the exchange margins.

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