ICE Releases Futures Which Pay Out In Bitcoin

The owner of the New York Stock Exchange, Intercontinental Exchange (ICE), has just started trading regulated Bitcoin futures contracts. Less than 24 hours ago, this new financial instrument began trading, increasing hopes that it will attract new investors who have, so far, stayed away from trading in cryptocurrency.

At 20.02 ET, the first trade took place at a price of $10,115. This is according to Bakkt, the company which is behind the contracts. Backed by ICE, Bakkt is a venture with the aim of facilitating cryptocurrency payments and trades.

Bitcoin Payouts

Probably the most significant fact about ICE’s futures contracts is that they are physically deliverable, paying out in Bitcoin when they are settled, or liquidated. This feature contrasts with ICE’s main competitor, CME Group, who had also released similar instruments in 2017, but payouts were in cash, not crypto. Physical settlement is normally used when trading oil, cattle, and metals.

ICE’s Bitcoin futures contracts are federally regulated, and, unlike Bitcoin CFDs, are allowed in the United States. It is hoped that this launch will provide legitimacy to a market which suffers from bad press, and constant controversy.

What are Futures Contracts?

Futures contracts, such as those launched by ICE, are legally-binding agreements to trade a particular commodity at a certain price and time. These financial instruments are a popular way for traders to invest in a market without having to physically purchase and store the commodity. Depending on whether they invest in order to benefit from the asset’s appreciation, or to short sell it and benefit from its depreciation, these instruments are extremely popular in all global financial centres.

Naturally, different types of instruments bring different conditions. In the case of ICE’s Bitcoin Futures Contracts, for example, traders can choose to buy and sell daily or monthly futures.

Are they Safe?

Any advanced trading instrument such as futures contracts comes with risk, so it is important that traders and investors are prepared to lose some or all of their capital before making a trade.

Bakkt, the ICE-backed company which released these Bitcoin futures contracts, has a stellar team of investors, including M12, Microsoft’s venture arm, and Boston Consulting Group. In the past, Bakkt also partnered with Starbucks in making the trading, storing and transfer of cryptocurrencies more accessible. The combination of reputable investors and a federally-regulated instrument make their futures contracts a reliable derivative, which promises to be free of scams and fraudulent actions.

Advanced Bitcoin Trading

The launch of futures contracts which payout in Bitcoin is only the latest of a series of advanced trading instruments which are now available for the volatile asset. Trading platforms such as Plus500 offer a range of these products to their users, allowing them to benefit from their correct speculation, without needing to own the underlying asset.