“The U.S. Securities and Exchange Commission has denied or tabled all bitcoin ETF proposals received so far, but proponents think a successful debut of futures could revive the concept. ETFs could make it easier for investors to bet on bitcoin’s price rising or falling because they can be bought and sold like stocks,” according to Reuters.
Derivatives help increase liquidity and improve markets for an asset category by allowing investors to bet on ups and downs of an asset, evening allowing individuals to adopt market-neutral strategies. They are also a key component in the creation of many futures-backed ETFs utilized by a range of investors.
Some market observers believe the launch of bitcoin futures will speed the introduction of exchange traded funds based on the digital currency. In recent weeks, several ETF issuers have also filed plans for blockchain ETFs, which would hold stocks with exposure to the digital currency trade.
CBOE bitcoin “futures are based on the auction price of bitcoin in U.S. dollars on the Gemini Exchange, which is owned and operated by brothers Cameron and Tyler Winklevoss, who are virtual currency entrepreneurs,” reports Reuters.
For more information on the cryptocurrency market, visit our Bitcoin category.