Bitcoin futures to be backed by BlockFi
- BlockFi will provide liquidity to clients trading bitcoin futures and options on the Chicago Mercantile Exchange (CME).
- The move will “facilitate financing efficiency for institutional market participants” says BlockFi CEO and Co-Founder Zac Prince.
- This comes as institutional investors like JPMorgan and Fidelity become increasingly active in the space.
Clients trading bitcoin futures and options on the CME will have access to liquidity provided by crypto-lender BlockFi. The move marks another step towards increasing Bitcoin‘s (BTC) presence in traditional markets.
In a statement published 30 October 2020, the lender said it wants to provide additional opportunities for institutional investors to manage their exposure to the crypto-market.
This comes several years after the CME first launched its bitcoin futures and options products, triggering one of the largest bull-runs in the asset’s history.
Bitcoin futures and options allow investors to bet on bitcoin’s performance which a number of institutional investors use as a hedge against performance in more traditional investments.
Justifying the move, CEO and Co-Founder of BlockFi, Zac Prince, said that the partnership between his company and the CME will help “facilitate financing efficiency for institutional market participants”.
Increasing liquidity not only allows current institutional investors to make more efficient decisions, but it further legitimises bitcoin derivatives as a viable hedging option.
Investment funds and banks have already taken an interest in cryptocurrency investment. JPMorgan recently launched a dedicated unit for blockchain and digital currency and investing giant Fidelity has allowed its clients to invest cryptocurrency investing for over a year.
According to research published by bitcoin futures analytics company Skew, the CME’s bitcoin futures now rank 2nd for open interest (a measure of market activity).
BlockFi’s partnership with the CME only serves to increase that popularity further, potentially laying the groundwork for further investment.
A large portion of the crypto-community see bringing institutional investment into bitcoin as the key to unlocking its potential as a high-performance asset class. For it to get there, they argue that its unattractive traits – its volatility and low trading volume – need to be substantially improved. BlockFi’s move could be a step in the right direction.