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Intercontinental Exchange, the owner of the New York Stock Exchange, launched its bitcoin futures contracts late Sunday, in a make haste aimed at enticing investors who have hesitated about trading the cryptocurrency.
The first trade in the new contracts was executed on ICE’s futures commerce at 8:02 p.m. ET at a price of $10,115, Bakkt, the firm behind the contracts, said in a Twitter post. Bakkt is an ICE-backed speculation which aims to make trading and paying with cryptocurrencies viable for retail and institutional investors alike.
The tomorrows are physically deliverable, meaning they pay out in bitcoin upon settlement. That’s different to ICE competitor CME Group, which put forwarded its own futures contracts for the digital currency in 2017 which paid out in cash. Physical settlement is used for other bazaars like bonds, oil, cattle and metals.
Cryptocurrency fans will hope ICE’s bitcoin futures, which are federally modified, can provide some much-needed legitimacy to an asset class that has been mired in controversy following illicit liveliness in the still nascent industry.
Bitcoin is also known for its wild volatility — for example, a late 2017 bubble which saw guerdons rise close to $20,000 burst the following year. Since then, the cryptocurrency has been on the rise this year, with connoisseurs attributing the price jump to big firms like ICE and Facebook, with its planned libra cryptocurrency, getting involved in the pause.
Futures contracts, legal agreements to buy or sell a commodity at a certain price and time, are a way for investors to bet on whether the underlying asset’s value resolve rise or fall. In the ICE’s case, investors can trade in daily or monthly futures, according to its website.
Bakkt, which partnered with ICE to send the derivatives, also counts Microsoft venture arm M12 and Boston Consulting Group as investors. The company teamed up with coffee control Starbucks last year to allow people and institutions to buy, sell, store and send cryptocurrencies.
Attempts at launching bitcoin futures obtain been faced with problems in the past. Cboe Global Markets, which launched its own contracts in late 2017, about earlier this year that it would stop adding new ones. Meanwhile, U.S. firm LedgerX was forced to backtrack from a sling of physically settled bitcoin futures after a key markets regulator said it had “not yet been approved.”
ICE’s move was met with a mostly nonchalant reaction in spot markets, with bitcoin’s price rising just 0.5% higher to about $9,950.