According to the Financial times, the Chicago Mercantile Exchange Group (CME), the world's largest futures exchange, is reported to be in talks to introduce spot trading of bitcoin (btc). The move aims to tap into growing demand among Wall Street money managers seeking exposure to the crypto sector.
The move marks a significant step for major Wall Street institutions to enter the digital asset space, following the approval of 11 spot bitcoin exchange-traded funds (ETFs) by the US Securities and Exchange Commission. .US (SEC) in January.
A direct catalyst for the price of bitcoin?
By introducing bitcoin spot trading on its platform, which already facilitates bitcoin futures tradingCME Group would allow investors to more easily participate in grassroots operations.
Basis trading, a strategy widely used among professional traders and prevalent in the U.S. Treasury market, involves selling futures while simultaneously purchasing the underlying asset to capitalize on the price difference between the two.
What is even more interesting is that bitcoin spot purchases directly impact btc price, since the buyers own the real asset. This direct ownership strengthens the link between bitcoin demand and its price, resulting in a bullish catalyst if plans for this launch are successful.
Additionally, spot markets, which are more liquid than futures markets, allow for efficient price discovery and smooth trading. Besides, arbitration Opportunities between exchanges help align prices and reduce discrepancies.
In short, by facilitating spot purchases, investors contribute to price discovery, increase liquidity, and potentially create a more stable and efficient market for the price of btc.
Open positions soar as institutional demand rises
bitcoin's resurgence from its 2022 low, hitting a record high of $73,700 earlier this year, combined with increased acceptance among investors, has transformed some of the world's largest financial institutions from bitcoin skeptics to proponents.
btc-pegged exchange-traded funds have seen significant growth, attracting substantial investments from hedge funds such as Bracebridge Capital and pension funds such as Wisconsin Board of Investment. Asset managers including BlackRock, Fidelity and Ark have seen more than $10 billion in assets flow into their cryptocurrency-related vehicles.
According to the Financial Times, CME Group has been a great beneficiary of this renewed institutional interestsurpassing Binance to become the world's largest btc futures exchange.
Its Chicago exchange currently has approximately 26,000 open positions valued at around $8.5 billion, more than double what it was a year ago. The potential spot trading business It would be operated through the EBS currency trading center in Switzerland, which complies with “strict regulations” governing the trading and custody of cryptocurrencies.
However, one industry executive questioned whether CME Group can achieve significant market share if its bitcoin trading business operates in two separate exchanges: CME in Chicago and EBS in Switzerland. Concerns revolve around potential inefficiencies resulting from this approach.
As CME Group moves closer to finalizing its plans for bitcoin spot trading, it underscores the growing integration of traditional financial institutions into the changing cryptocurrency landscape. The potential for greater market access, liquidity and infrastructure promises to shape the future of institutional participation in the digital asset space.
At press time, the largest cryptocurrency on the market is trading at $66,000 and has been struggling for the past 24 hours to break above this level completely. This level is one of the key resistance walls for btc on its way to retesting higher levels and its current all-time high.
Featured image from Shutterstock, chart from TradingView.com
