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CME Group’s Anticipated Debut in Bitcoin Spot Trading Market

Chicago Mercantile Exchange (CME) is the second largest exchange in the world for trading futures and options on futures. It is the largest futures exchange in the United States.

The Group has recently announced plans to launch spot bitcoin trading on its platform. These added features aim to capitalize on the increasing demand for Bitcoin in the global cryptocurrency market.

Breaking: US @CMEGroup announces its plan to host spot Bitcoin trading 👀

I’ve been saying this would happen since 2021. This is the only way to curb @binance price manipulation and dominance.

This was in my 5 “must happen” list. https://t.co/lYYSer3QPQ pic.twitter.com/hBCgLXrIXR

— MartyParty (@martypartymusic) May 16, 2024

The company’s platform is already topping the Bitcoin futures exchange with open interest. However, the open interests are driven mainly by non-regulated Binance.

CME’s Revelation

Reportedly, the group has discussed with a few traders who are ready to trade bitcoins in a regulated marketplace. They need to have complete knowledge of the activities before putting them into practice.

The report anticipated that the spot trading business would use the electronic services currency trading venue in Switzerland. However, the CME did not make any comment or confirm the launch.

Moreover, the spot trading business will align with the CME’s existing standard and micro futures contracts. These instruments are considered a proxy for institutional activity.

This new launch will make the group more dominant in the global crypto market. It will allow users to execute and place basis trades with increased efficiency. The basis trading strategy is very common among proficient Bitcoin traders.

The basis trade execution borrows money to sell futures, simultaneously purchase the underlying asset, and build the potential profit from the existing price discrepancy.

Similar Players and its Impact on the Market

Deutsche Borse, a popular trading marketplace based in Germany, has also entered the crypto market this year. It has the potential to compete with CME. The Group can also receive competition from other prominent players, including CBOE Global Market, as it has already established crypto spot trading. However, CBOE is expected to halt its trading operations due to a lack of regulations in the sector.

Europe is planning to increase the crypto regulations in the market as the status of most of the cryptocurrencies remains vague in the region. The popular cryptocurrencies, excluding Bitcoin, are already facing issues safeguarding their existence and maintaining their positions.

Although the availability of the spot market means traders can now build complex crypto trading strategies around spot and futures instruments in the regulated marketplace. Carry trades have always been a part of the CME platform.

The founder of 10x Research shared his views, saying crypto exchanges can lose their market share as some businesses will be absorbed by the anticipated entry of Bitcoin spot market on CME.

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