On May 11, at 4:00 p.m. (Greenwich Time), the first futures were quoted on the Crypto Facilities platform, a cryptocurrencies trading business headquartered in the United Kingdom. First of all, futures are standardized contracts, since the stock market price, which allows the client to buy a predetermined amount of an underlying asset at a predetermined price and in a specified period. Any type of asset can be underlying and, therefore, even cryptocurrencies. They are normally used as coverage for investment funds and savings banks, but, of course, they can also have a speculative function.
According to the press release from Crypto Facilities, the futures relating to Ethereum, allow investors to take long and short positions.
This is the Ether’s (ETH), Ethereum’s cryptocurrency, first futures contract, which will offer a regulated business, in this case by the United Kingdom. According to the company, this tool permits its investors to protect themselves from being exposed to the instability of the crypto market or from diversifying their wallets.
The offer of these financial tools will let the British company to attract new investors, thus expanding their line of products.
Crypto Facilities currently offers futures contracts for both Bitcoin and Ripple. Likewise, the investment in Ether isn’t a coincidence.
Either has the second highest liquidity after Bitcoin, with thousands of dollars of transactions per day, meaning the Ethereum network is the crown jewel for intelligent contracts in the world of the blockchain.
Keeping the great popularity gained by Ethereum during the past year in mind, the interest will undoubtedly be significant, with new investors attracted by this trading tool that will bring more liquidity to the market.
The offer of futures could extend to other cryptocurrencies
Therefore, it’s probable that the offer of futures could extend to other cryptocurrencies in the next few months.
Crypto Facilities will work in collaboration with Akuna Capital B2C2, which will provide liquidity for this new service.
It could be mentioned that there are other countries that offer futures contracts in cryptocurrencies. The first financial entities that have offered this service are CBOE (Chicago B Board options Exchange) and CME Group (Chicago Mercantile Exchange), when they launched their Bitcoin future in December of last year/
On the other hand, Crypto Facilities provided Bitcoin’s exchange rate, used in its futures contracts, to CME Group.
In December, the launch of Bitcoin’s first futures contracts was received positively by the market, which, at times, influenced its irrational increase. However, according to a recent survey by the Federal Reserve Bank of San Francisco, it was exactly their launch that has been signaled as the cause of the price fall later on.
Given the growing interest of institutions for the cryptocurrencies market, Bloomberg, the world’s leading provider of market data, launched the Bloomberg galaxy Crypto Index (BGCI), which is designed to indicate the performance of the part of the cryptomarket with the most liquidity. The BGCI is a balanced index based on the capitalization of the market, which implies that the cryptocurrencies with a higher market capitalization will carry more weight in the index. The BGCI will be composed of a maximum of 12 cryptocurrencies negotiated in dollars. At the time of the launch, 10 cryptocurrencies, including Bitcoin, Ether, Monero, Ripple and Zcash, were presented.
The components of the index cover various areas of the cryptocurrency market: value reserve and means of exchange (for example Bitcoin), cryptocurrencies based on platforms (Ethereum) and cryptocurrencies oriented toward privacy (Monero).
It will be rebalanced every month and the weight of each component will be between a maximum of 30% and a minimum of 1%. The index, which began with a value base of 1.000, began to quote on May 3, 2018.
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