by Liam J Kelly
In a tentative announcement, officials from the German exchange Deutsche-Boerse expressed interest in trading Bitcoin futures contracts in the near future. As with anything in the space, due diligence and thorough research into the new asset class will be required.
Europe’s Largest Derivatives Exchange
A spokesperson representing the German exchange told the finance publication WirtschaftsWoche that they “are thinking about futures that private and institutional investors can use to hedge existing investments in bitcoin or bet on falling cryptocurrency prices.”
They also explained the importance of addressing bitcoin’s volatility, uncertain regulatory standards, and the difficulty in assessing the digital currency’s spot value.
If the move passes, the futures contracts would be traded on Europe’s largest derivatives exchange, the Eurex Exchange. Opening crypto trading on this exchange comes as little surprise as it has a rich history in combining the technological with the financial.
The move to a more advanced form of trading shifted the financial power away from the United States and Great Britain in 1998. Thus the transition also brought with it massive growth, as the exchange traded nearly 114.8 million contracts in July 2016 alone.
The Eschurt-based firm, a town close to the country’s financial epicenter, Frankfurt, may potentially incite a second financial disruption. If Eurex were to execute a Bitcoin futures contract option, it would be the first of its kind on the continent.
Advantages of Moving to an Exchange
As both CBOE and CME have released their respective Bitcoin Futures Contracts, Deutsche-Boerse would be wise to follow these results closely.
For one, Eurex will likely need a more robust online platform as CBOE saw outages following its release on December 10. The actual trades were only slightly affected as volumes were relatively low.
Not only that, but the spot price of the digital currency also jumped, and spectators noted that futures were inherently more volatile than expected.
Zennon Kapron, the managing director of Shanghai-based consulting firm Kapronasia, told Bloomberg on December 10, 2017, that “it is rare that you see something more volatile than bitcoin, but we found it: bitcoin futures.”