The new product is set to give investors exposure to the Bitcoin value movements on the underlying CoinDesk Bitcoin Price Index (XBX) and will only be settled in the United States dollar.
A leading exchange in Canada, TMX Group, has announced plans to launch cash-settled Bitcoin futures on the Montréal Exchange (MX) soon. According to the announcement, the cash-settled Bitcoin futures will track the decade-old CoinDesk Bitcoin Price Index (XBX). Notably, the MX Bitcoin futures contract will settle in the United States dollars and will be cleared at the Canadian Derivatives Clearing Corporation (CDCC).
The cryptocurrency exchange is leveraging on the rising demand for digital assets products, more so as the United States SEC delays to approve Bitcoin spot ETFs among others. Additionally, the Canadian government has implemented clear virtual assets regulatory frameworks that have helped the industry to grow in the region.
“Cryptocurrencies are gaining momentum in Canada, with demand for investing in digital asset classes rising. Despite growing interest, investors face limitations when evaluating vehicles to manage their exposure to Bitcoin price movements,” the company noted.
The CoinDesk Bitcoin Price Index (XBX), which is issued by CoinDesk Indices (CDI), has consistently provided real-time price updates since 2014 and currently has about $17 billion in assets under management (AUM). The announcement by the TMX group did not provide any timeline for the Bitcoin futures contract launch, thus leaving a gap for speculation.
Notably, the Montréal Exchange will be joining other firms like ICE Futures Singapore Futures contract, Grayscale Bitcoin Trust, and Purpose Bitcoin ETF, to track the CoinDesk Bitcoin Price Index (XBX).
Bitcoin Futures Market
In the past few years, the demand for Bitcoin products, to help investors manage their exposure to crypto price movements, has significantly increased. For instance, the Chicago Mercantile Exchange (CME) launched a Bitcoin futures product to its lineup earlier this year. A dozen other institutions have applied to launch Bitcoin futures ETFs in the United States as the push for a spot Bitcoin ETF continues.
Essentially, the Bitcoin futures contract helps investors diversify their portfolio in the cryptocurrency industry amid the mainstream adoption of digital assets. With Bitcoin futures, crypto traders can easily understand the price action of an underlying asset as the liquidity improves over time.
Market Outlook
The cryptocurrency market has held above $1 trillion in market cap YTD despite short-term uncertainties. Bitcoin (BTC) has managed to remain in the top position with a market dominance of about 50.43 percent. According to the latest crypto market data, Bitcoin price exchanged around $27.4k on Wednesday, having gained approximately 6 percent in the past four weeks.
The value of Bitcoin is expected to continue rising in the coming years, more so after the fourth halving coupled with the rising demand from institutional investors.
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