The bitcoin price stormed past $11,000 on Friday following the announcements that two U.S. derivatives exchanges have received regulatory approval to list bitcoin futures contracts within the near future.
Friday morning, CME and CBOE, both headquartered in Chicago, separately announced that they had received the green light from the Commodity Futures Trading Commission (CFTC) to create and list bitcoin futures products on their trading platforms. CME’s futures will launch December 18, while CBOE has yet to set a target release date.
The announcements flipped an ignition switch in the markets, and traders initiated a buying frenzy. Shaking off concern that it was in the midst of a retrace or on the back side of a bubble cycle, the bitcoin price leaped to a two-day high of $11,161 on bitcoin exchange Bitfinex.
Neither CME nor CBOE’s bitcoin futures will have a direct impact on the asset itself because the contracts will be settled with cash rather than bitcoins.
However, most analysts expect that Wall Street firms will feel more comfortable wading into the cryptocurrency ecosystem once exchange-traded products are available. Investors also believe that Wall Street capital will eventually flow into the underlying markets themselves, raising the price of bitcoin and other cryptocurrencies. Eventually, an exchange may even launch a futures contract that is settled with the asset itself, rather than cash.
Barry Silbert, chief executive of the Digital Currency Group, told CNBC’s “Squawk Box” that he anticipates that the launch of bitcoin futures will also usher in the first Bitcoin ETF, an investment vehicle that will make bitcoin more palatable to retail investors who want exposure to the price movement of bitcoin without the risk of holding the asset directly.
“I think it is going to enable finally the approval of bitcoin ETFs, and other digital currency ETFs, which is game changing,” he said.
At the time of writing, bitcoin was trading at a global average of $11,151, according to the BlockExplorer Bitcoin Price Index, giving the world’s most prominent cryptocurrency a $186 billion mark cap.