Intercontinental Exchange, the owner of the New York Stock Exchange, launched its bitcoin futures contracts late Sunday, in a move aimed at enticing investors who have hesitated about trading the cryptocurrency.
The first trade in the new contracts was executed on ICE's futures exchange at 8:02 pm ET at a price of $ 10,115, Bakkt, the firm behind the contracts, said in a Twitter post. Bakkt is an ICE-backed venture that aims to make trading and paying with cryptocurrencies viable for retail and institutional investors alike.
The futures are physically deliverable, meaning they pay out in bitcoin upon settlement. That's different to ICE competitor CME Group, which introduced its own futures contracts for the digital currency in 201
Cryptocurrency fans will hope ICE's federally regulated bitcoin futures can provide some much-needed legitimacy to an asset class that has been mired in controversy following illicit activity in the still nascent industry.
Bitcoin is also known for its wild volatility – for example, a late 2017 bubble which saw prices rise close to $ 20,000 burst the following year. Since then, the cryptocurrency has been on the rise this year, with experts attributing the price jump to big firms like ICE and Facebook, with its planned libra cryptocurrency, getting involved in the space.
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 will rise or fall. In the ICE case, investors can trade in daily or monthly futures, according to its website.
Bakkt, which partnered with ICE to launch the derivatives, also counts Microsoft venture arm M12 and Boston Consulting Group as investors. The company teamed up with Starbucks coffee chain last year to allow people and institutions to buy, sell, store and send cryptocurrencies.
Attempts to launch bitcoin futures have faced problems in the past. Cboe Global Markets, which launched its own contracts in late 2017, said earlier this year that it would stop adding new ones. Meanwhile, U.S. LedgerX firm was forced to backtrack from launch 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 tepid reaction in spot markets, with bitcoin's price rising just below 0.5% higher to about $ 9,950.