After futures, the market is looking forward to Bitcoin ETF

The Chicago Mercantile Exchange Group, the world's largest and oldest futures exchange, announced on October 31 that it will launch Bitcoin futures starting in the fourth quarter of 2017.

This is not the end. After the emergence of futures, many institutional investors began to expect the emergence of Bitcoin ETFs.

US media quoted Garrett See, CEO of DV Chain, a company engaged in virtual currency trading, as saying:

Clearly, there is huge potential for a Bitcoin ETF. Isn’t it ironic that people want to get rich from Bitcoin but don’t own it?

Currently, the price of Bitcoin remains above $6,000, and once exceeded $6,450. Compared with the beginning of the year, the price of Bitcoin has increased sixfold.

Ari Paul, co-founder of fund company Blocktower Capital, said:

There are many investors who are interested in Bitcoin. However, due to regulation or concerns about Bitcoin's drastic fluctuations, it is difficult for them to actually invest in Bitcoin.

He also believes that it will take at least 12 months for the Bitcoin ETF to pass regulatory review and actually land:

The standards for establishing ETFs are much higher than those for establishing futures.

CME Group's upcoming futures contracts will be cash-settled based on the CME CF Bitcoin Reference Rate (BRR), which serves as a USD "price" for Bitcoin and is updated once a day. Bitcoin futures will be listed on CME Group's trading directory and will be subject to CME Group's rules for futures trading.

However, many market participants have expressed concerns about Bitcoin futures and ETFs. After Bitcoin is approved by the futures market, the market is worried that this will cause a speculative frenzy and the financial crisis may recur.

Joe Saluzzi, head of Themis Trading, a U.S. securities investment firm, said: "I personally like the concept of Bitcoin. But when Wall Street innovators start packaging products that they don't know what is behind them and label them as derivatives, it reminds me of the financial crisis."

According to the Bitcoin.org website, Bitcoin transactions are difficult to be effectively regulated. There are now more than 50 exchanges in the world, of which only two are in the United States. In addition, due to the lack of a unified pricing tool, Bitcoin prices vary greatly in different places. Moreover, as mentioned in the Wall Street Journal editor-in-chief's selected article "Is Bitcoin's worst crisis since its birth "self-destruction" or "rebirth from Nirvana"? ", Bitcoin will have another hard fork in November, which is related to "life and death". It is still unknown how Bitcoin will trend at that time.

The difficulty in pricing Bitcoin is similar to the mortgage crisis that led to the financial crisis. This worries Saluzzi, who believes it will bring huge risks to the market.

But more importantly, Saluzzi is worried that CME's approval could legitimize Bitcoin and lead regulators to approve more and more exchange-traded fund (ETF) applications. According to data from Bitcoin trading platform Bitstamp, one hour after CME announced its decision, the Bitcoin price in U.S. dollars exceeded $6,400, up more than $150 in less than an hour.

The launch of Bitcoin futures will give Bitcoin a great advantage in the futures market and digital currency trading. ETFs have attracted about $3.3 trillion in funds so far and are growing, but traders must understand the risks.

The U.S. Securities and Exchange Commission (SEC) previously reviewed a Bitcoin ETF and rejected the Winklevoss Bitcoin Trust's listing application in March this year. The SEC believed that Bitcoin lacked the regulatory infrastructure to prevent manipulation.

Saluzzi said that Bitcoin transactions may be full of manipulation and fraud, and unless there is a better regulatory system to manage Bitcoin, Bitcoin transactions are tantamount to playing with fire.