CFTC Chairman Breaks His Silence On Bitcoin Futures Contract

Two biggest derivate exchanges CBOE and CME, jointly launched the first regulated U.S. bitcoin futures contracts. This generated a wave of growing investments which in turn gave a much needed boost to the market.

For those not familar with a futures contract, it is a “technique to hedge positions and reduce the risk of the unknown. It is also used for arbitrating between current spot and future contracts.” However, according to researchers, this move triggered the decline of the popular cryptocurrency which demonstrated a decline which has now lasted almost all of 2018. The reason behind this decline is that the futures contract allowed institutional investors to short the price of bitcoin.

In a recent interview with Fox Business’s Maria Bartiromo, CFTC Chairman J. Christopher Giancarlo, stated that this launch coupled with the “do no harm” strategy that CFTC adopts, has helped pop the bitcoin price bubble and has accorded some sort of stability to the market.

He said:

“According to the San Francisco Fed, it was the bitcoin futures emergence that actually sapped the bitcoin bubble that emerged at the end of 2017, and we have seen bitcoin, perhaps in some people’s view, achieve a more sustainable level than it was during the bubble period last year.”

According to Giancarlo, the market is growing and showing a greater level of maturity since an increasing number of institutional investors are engaging with this asset class.

He further added.

“We’re seeing more institutional movement into this area, and I think with more institutional movement, we should see more maturization of it,”

To conclude, he estimated that it will still take a while before the market achieves a more profound stability,

“Like all things, it takes time to mature, and with the movement of more institutional investors into that space, I think we’ll see that maturization.”