CBOE is releasing its new Bitcoin futures contracts today, a week before rival CME Group does the same. The release of Bitcoin contracts on two major American exchanges is a major sign of mainstream acceptance that has been at least partly responsible for the rapidly rising value of the coin this year.
However the same instability of price that makes the asset so attractive has also led to anxiety in the market. For this reason, CBOE is raising margin requirements from 33% to 44%, according to Bitcoinist.
The safeguards include demanding at least 33% cash up front for each bet, and enforced trading breaks to be triggered if (when) the price of Bitcoin moves by more than 10% in a day, according to Barron's.
This seems sensible - only this weekend, the price of one bitcoin surpassed USD 18,000, and exchanges struggled to cope with demand for the coin. Suspicions of market manipulation abound.
Criticism
The Futures Industry association has criticised CBOE and CME Group for lauching the contracts without adequate research. According to Bloomberg, FIA member firms have reservations about Bitcoin contracts due to price instability:
“We remain apprehensive with the lack of transparency and Regulation of the underlying reference products on which these futures contracts are based and whether exchanges have the proper oversight to ensure the reference products are not susceptible to manipulation, fraud, and operational risk.”
The Commodity Futures Trading Commission last week urged all related parties to put closely observe the behaviour of these new contracts, so as to avoid market manipulation.
A statement from the regulator said that "market participants should take note that the relatively nascent underlying cash markets and exchanges for bitcoin remain largely unregulated markets over which the CFTC has limited statutory authority... investors should be aware of the potentially high level of Volatility and risk in trading these contracts.”
CBOE signed an agreement with Bitcoin exchange Gemini and announced the launch of Bitcoin futures in August of this year. Since then, Bitcoin has risen in value from USD 4,000 to just over USD 13,000 (at the time of writing).
Last month, CBOE CFA Russel Rhoads candidly stated "I don't know" regarding the issue of Bitcoin futures pricing: "I’ve heard arguments for the futures trading at both a premium and a discount to the spot price, personally I think the best strategy is to see what the market tells us when bitcoin futures are available for trading."
CBOE is releasing its new Bitcoin futures contracts today, a week before rival CME Group does the same. The release of Bitcoin contracts on two major American exchanges is a major sign of mainstream acceptance that has been at least partly responsible for the rapidly rising value of the coin this year.
However the same instability of price that makes the asset so attractive has also led to anxiety in the market. For this reason, CBOE is raising margin requirements from 33% to 44%, according to Bitcoinist.
The safeguards include demanding at least 33% cash up front for each bet, and enforced trading breaks to be triggered if (when) the price of Bitcoin moves by more than 10% in a day, according to Barron's.
This seems sensible - only this weekend, the price of one bitcoin surpassed USD 18,000, and exchanges struggled to cope with demand for the coin. Suspicions of market manipulation abound.
Criticism
The Futures Industry association has criticised CBOE and CME Group for lauching the contracts without adequate research. According to Bloomberg, FIA member firms have reservations about Bitcoin contracts due to price instability:
“We remain apprehensive with the lack of transparency and Regulation of the underlying reference products on which these futures contracts are based and whether exchanges have the proper oversight to ensure the reference products are not susceptible to manipulation, fraud, and operational risk.”
The Commodity Futures Trading Commission last week urged all related parties to put closely observe the behaviour of these new contracts, so as to avoid market manipulation.
A statement from the regulator said that "market participants should take note that the relatively nascent underlying cash markets and exchanges for bitcoin remain largely unregulated markets over which the CFTC has limited statutory authority... investors should be aware of the potentially high level of Volatility and risk in trading these contracts.”
CBOE signed an agreement with Bitcoin exchange Gemini and announced the launch of Bitcoin futures in August of this year. Since then, Bitcoin has risen in value from USD 4,000 to just over USD 13,000 (at the time of writing).
Last month, CBOE CFA Russel Rhoads candidly stated "I don't know" regarding the issue of Bitcoin futures pricing: "I’ve heard arguments for the futures trading at both a premium and a discount to the spot price, personally I think the best strategy is to see what the market tells us when bitcoin futures are available for trading."
FAQs
Futures Margin Rates
| Description | Symbol Root | Overnight Margin |
|---|
| Indexes |
|---|
| ICE Bitcoin | BTM | $5,610 |
| CME BITCOIN FUTURES | BTC | $77,682 |
| CME MICRO BITCOIN FUTURES | MBT | $1,590 |
69 more rowsWhether you go long or short, initial margin requirements vary by futures product, generally ranging anywhere from 3% to 12% of the notional value of the contract. There's also a maintenance margin requirement (balance your account must carry to stay in a position) that may be increased at any time.
What is the leverage of Bitcoin futures? ›
Bitcoin and bitcoin futures can be highly volatile. Leverage created by futures contracts can significantly amplify both gains and losses. Futures contracts are standardized, time-limited contracts that convey the right to buy or sell the underlying asset at some point in the future.
What is the margin on nano Bitcoin futures? ›
Priced at just 1/100th of a Bitcoin, Nano Bitcoin Futures from Coinbase Derivatives allow traders to navigate volatile markets with a contract size that fits any portfolio. There are many advantages to trading Nano Bitcoin Futures including: The ability to trade with $25 margins and $0 market data fees.
What is the margin requirement for Bitcoin? ›
To buy an entire Bitcoin, you'll have to allocate only 1% of the trade as the collateral (margin) for the trade. The remaining 99% of the required funds will be made available by your broker as a loan.
What is the difference between BTC margin and futures? ›
While margin trading offers higher potential for profits but also exposes you to higher potential for losses, futures trading is more stable in results. The difference between margin trading and futures trading lies in the ownership of assets, risk and leverage, timeframe, and price determination.
Can you lose more than your margin in futures? ›
Because margin requirements for futures contracts involve leverage, profits and losses can be magnified, so it's possible to lose more than the initial investment to open a futures position.
What is the 25 margin rule? ›
Amount You Need After You Trade – Maintenance Margin
The equity in your margin account is the value of your securities less how much you owe to your brokerage firm. FINRA rules require this “maintenance requirement” to be at least 25 percent of the total market value of the margin securities.
Who pays margin in futures? ›
The buyer or seller of a futures contract is required to deposit part of the total value of the specified commodity future that is bought or sold – this is known as margin money.
What is the margin in crypto futures? ›
Margin is essentially a loan on whatever you want to buy while futures is essentially a contract set for a future date and price that can be speculated upon. Futures contracts are typically fixed quantity items while margin trading quantities aren't fixed and depend on the funds you actually put in.
What is 100x leverage in crypto? 100x leverage in crypto means a trader can open a position worth 100 times their original investment, significantly amplifying potential gains or losses from small price movements.
What does 50x mean in crypto? ›
For example, let's take a $100 Bitcoin trade. Imagine that a trader's position is increased by leverage of 50x (a 1:50 ratio), which results in a $100 Bitcoin position being worth $5,000 instead. This method works for both – long and short trades.
How much is a Bitcoin futures contract worth? ›
Recent Contracts
| Last | Chg |
|---|
| CME Bitcoin (USD) Nov 2024 | $69,220.00 | -435.00 |
| CME Bitcoin (USD) Dec 2024 | $69,715.00 | -445.00 |
| CME Bitcoin (USD) Mar 2025 | $72,155.00 | 1,215.00 |
| CME Bitcoin (USD) Jun 2025 | $73,915.00 | 0.00 |
6 more rowsInitial margin (IM) is how much margin is required to open a position in the first place. Once you have no more spare initial margin (your IM bar is at 100%+), you will no longer be able to open new positions.
How do you trade Bitcoin margin? ›
Here's how you do margin trading:
- Once you've activated your margin trading account and logged in, you'll need to deposit some funds.
- Next up, you can apply for a loan in BTC using your deposited funds as collateral.
- You will be charged an interest every day, which updates frequently depending on the exchange.
Margin is essentially a loan on whatever you want to buy while futures is essentially a contract set for a future date and price that can be speculated upon. Futures contracts are typically fixed quantity items while margin trading quantities aren't fixed and depend on the funds you actually put in.
How much does Bitcoin futures charge? ›
Non-Member Pricing
| Symbol | Description | Exchange Fee |
|---|
| BTC | CME Bitcoin Futures | $6.50 per side, per contract |
| MBT | Micro Bitcoin Futures | $2.50 per side, per contract |
| ETH | CME Ether Futures | $4.50 per side, per contract |
| MET | Micro Ether Futures | $0.20 per side, per contract |
93 more rowsInitial margin requirements vary by futures product and are typically a small percentage—from 2% to 12%—of the contract's notional value (the cash equivalent value to owning the asset, or the total value of the contract).
What is the price of Bitcoin futures? ›
Recent Contracts
| Last | Chg |
|---|
| Bitcoin (CME) Front Month | $67,780.00 | -560.00 |
| CME Bitcoin (USD) Jul 2024 | $67,780.00 | -560.00 |
| CME Bitcoin (USD) Aug 2024 | $68,530.00 | -560.00 |
| CME Bitcoin (USD) Sep 2024 | $69,030.00 | -570.00 |
6 more rows