CME’s Bitcoin Futures Contract: Working Principles

As it is already known, the issue of CME Group’s futures contracts on the Bitcoin basis has been solved. Owning such contract allows traders and other market participants to conduct speculative transactions at the price fluctuations of the Bitcoin token. At the same time, it is not necessary to be an owner of a cryptocurrency.

The fixed price of the futures is 5 Bitcoins, which is about 60,000 US dollars (rate 1 BTC = $ 11733), as of December 3rd, 2017. The minimum price fluctuation for cryptocurrency is set at $5.00. If you own one such contract in the amount of $60,000, each fluctuation will bring you $30. If during the day, the price of the token rises by $100 (i.e. will increase by 20 fluctuations), then a potential investor who has one Bitcoin futures contract will be able to receive $600 per day. Otherwise, if the price of the cryptocurrency is reversed in the opposite direction by the same $100, the investor loses $600.

To purchase a contract, you can make an amount of 5 to 10% of the futures price. However, it should be noted that if the price of Bitcoin falls after the trading session, and causes losses exceeding your capital, you will be oweing the missing amount to CME Group. To mitigate risks, the company set limits on the price range for Bitcoin futures at the level of 7%, 13%, and 20%.

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