The spot price of bitcoin varies from time to time, and the spot price is not as up-to-date as the CME or CBOE. To avoid making the same mistake, you should always buy and sell bitcoin on the futures markets, such as the CME and CBOE. This is because they embed new information faster. However, spot isn’t a perfect match for futures. In this article, we’ll look at CME and BITO.
BITO
The BITO spot price is the price at which you can buy a bitcoin immediately. It is the same price as the spot price of bitcoin, but the price of BITO is much smaller, relative to the size of the short-term Treasury market. This means that BITO will tend to underperform the spot price by a significant amount over time. The following chart shows how BITO spot price changes over time.
CBOE
The SEC has rejected a bid by an exchange-traded fund to track the Bitcoin spot price, citing a lack of a surveillance-sharing agreement with markets trading the underlying assets, including the Chicago Board of Exchange. In the past, the SEC has said that such a deal is a condition for approval. The company, however, did register its Wise Origin Bitcoin Trust to trade on the NYSE Arca exchange last March.
CME
There are two ways to make money with the CME Bitcoin spot price. The first is to buy a contract prior to the price falling. The person who holds the underlying asset sells at a higher price, and waits for the CME to fall to buy back in at a lower price. This is known as shorting. It’s important to remember that a drop in the price is easier to predict than an increase, because more people need to trade in order to make a profit.
IS
How does the Bitcoin spot price differ from the futures price? The spot price is much more volatile than the futures price, and it can move dramatically, even by a small amount. The spot price can also be affected by local events or perceived volatility. A futures market may only be open for a few hours a day, but Bitcoin is traded around the clock. This means the price can quickly reflect Bitcoin-related developments.
GIS
The purpose of this report is to assess the informational role of Bitcoin markets. The opinions in the report are those of Global Investment Strategy and are for informational purposes only. They do not represent a forecast for the future performance of any individual security, market sector, or currency. In addition, they do not constitute an endorsement of any specific security or investment product. They do not guarantee the future performance of the markets or securities referred to in the report. Further, they do not make any commitment to update or revise their opinions at any time. Similarly, the opinions of the Wells Fargo & Company affiliates may be inconsistent and not reflect the latest market developments.
Volatility
A measure of the volatility of an asset is the standard deviation. A higher volatility indicates a riskier investment. It also means that prices can move significantly from their historical averages. This makes it important for investors to limit their exposure to volatile assets. Higher volatility also drives up the cost of hedging, a common practice used by merchant services. The lower volatility, the cheaper it will be to convert from one currency to another.
Futures markets
Bitcoin futures are based on the CME CF Bitcoin Reference Rate, which averages bitcoin trading activity across the largest bitcoin spot exchanges. CME is a US-registered designated contract market and derivatives clearing organization regulated by the Commodity Futures Trading Commission (CFTC). The CFTC has exclusive jurisdiction over Bitcoin futures markets in the US. A trader’s account must be held with a registered futures broker.
