On January 3, 2009, when the pseudonymous Satoshi Nakamoto mined the genesis block of bitcoin,the bitcoin blockchain became a reality – a milestone widely seen as the beginning of the world’s first decentralized cryptocurrency.
Bitcoin has not only paved the way for digital currencies, but also profoundly influenced financial institutions and global economics. CME Group has worked with the industry to help institutions manage the risk and opportunities related to the remarkable developments in the crypto space these last 16 years, providing new product solutions as the market continues to grow.
A brief history
October 2008: “Bitcoin: A Peer-to-Peer Electronic Cash System” whitepaper released on Halloween, about making payments "without going through a financial institution."
January 2009: Genesis block mined, containing the following quote: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”
March 17, 2010: First-ever recorded price of bitcoin at a value of $0.003.
May 22, 2010: First real-world transaction for purchase of goods: two pizzas for 10,000 bitcoin.
July 18, 2010: Mt. Gox, the first crypto exchange, was launched..
February 2011: Dark web Silk Road exclusively accepted bitcoin as payment, transacting ₿9.9 million (≅ $214 million). Bitcoin price rose to $30 in June and dropped to $2 by year-end.
November 28, 2012: First bitcoin halving event, setting stage for subsequent halving events.
March 28, 2013: Bitcoin’s market cap surpassed $1 billion for the first time.
First bitcoin ATM installed in Canada.
November 28, 2013: As media attention intensified and more merchants accepted bitcoin as payment, bitcoin topped $1,000 for the first time.
February 28, 2014: Bitcoin’s first real challenge: Mt. Gox exchange filed for bankruptcy after hackers stole 850,00 bitcoin (≅ $500,000,000 in value), underscoring security flaws and risks faced by investors.
2015: Microsoft began accepting bitcoin for Xbox and Windows software purchases.
Number of merchants accepting bitcoin exceeded 100,000.
2016: Cabinet of Japan officially recognised that digital assets such as bitcoin had a similar function to fiat currency.
July 2016: Bitcoin’s second halving event, reducing mining rewards from 25 bitcoins to 12.5 bitcoins.
November 2016: CME Group and CF Benchmarks introduced CME CF Bitcoin Reference Rate (BRR): a reliable, transparent, once-a-day bitcoin price benchmark.
August 1, 2017: Hard fork in bitcoin's underlying code created Bitcoin Cash, a new blockchain meant to increase its capacity to process transactions.
December 18, 2017: CME Group launched cash-settled Bitcoin futures, enabling global investors to hedge the price risk on a regulated exchange. Bitcoin reached a record high of $19,666 the following week.
May 2018: Third bitcoin halving event: mining rewards were cut from 12.5 bitcoins to 6.25 bitcoins per block.
Early 2020s: Institutional investment surged, signaling growing acceptance of bitcoin:
- MicroStrategy ($250 million investment as a treasury reserve asset)
- Square ($50 million investment)
- MassMutual ($100 million investment)
- Tesla (multiple substantial investments)
Financial giants like Fidelity and Goldman Sachs launched services to facilitate crypto trading, further legitimizing its status.
February 2021: Bitcoin's market capitalization reached $1 trillion for the first time.
April 14, 2021: Coinbase became a public company on the Nasdaq exchange via a direct stock listing.
September 7, 2021: Bitcoin became legal tender in El Salvador, the first country to do so.
October 2021: First futures-based Bitcoin ETF in the U.S. BITO from ProShares approved by the SEC, based on Bitcoin futures from CME Group.
2021-2022: As traditional financial markets suffered from the effects of quantitative tightening and high-interest rates, crypto markets suffered a deep retracement.
Over-leveraged crypto lending firms such as Celsius, Voyager, BlockFi and Genesis collapsed.
Prominent crypto hedge fund 3 Arrows Capital collapsed.
Crypto exchange FTX, led by Sam Bankman-Fried, collapsed.
January 2024: First 11 U.S. spot Bitcoin ETFs began trading, offering direct exposure to bitcoin for the first time on U.S. stock exchanges. Of those, six use the CME CF Bitcoin Reference Rate New York Variant as their benchmark.
Collectively is the most successful ETF launch in history, building $5 billion in AUM overnight, amassing $65 billion in AUM to date.
The post-U.S. election crypto rally witnessed bitcoin’s price exceed $100,000 for the first time in its 16-year history and bitcoin’s market cap cross $2 trillion. CME’s suite of Bitcoin futures, including Bitcoin (BTC) futures, Micro Bitcoin MBT futures and Bitcoin Friday futures (BFF), acted as the source for price discovery and crossed the $100K marker ahead of the spot markets.
Our suite of Cryptocurrency Reference Rates and Real-Time Indices as well as futures and options have played a pivotal role in the maturation of bitcoin and ether markets, allowing for unparalleled price discovery in a transparent and liquid futures market.
Today, our reference rates serve as the benchmarks for global Bitcoin ETFs while our Bitcoin futures are the foundation on which those ETFs were built. Since November of 2023, we are the world’s largest Bitcoin derivatives exchange measured by futures OI, with more than $20B in BTC notional OI and our market participation exceeding 30%. Our November BTC suite ADV,- our best ever, exceeded 140K contracts, having doubled from last month and is now up more than 5x compared to November 2023. That’s more than 116K equivalent bitcoin, or more than $10B in daily risk transference. In 2024, 16.8M Bitcoin contracts were traded across the suite, valued at over $1.4T.
The introduction of CFTC regulated, cash-settled futures and options has helped to further expand both institutional and retail participation in the space.
The ease in which futures are accessible also reduces the barriers to entry. Our cash-settled Cryptocurrency futures makes participating in crypto no different than trading S&P 500 futures and removes the need for a wallet or worry about hackings. Our suite of products from the institutionally sized BTC futures (5x multiplier) to Micro Bitcoin (MBT) futures (0.10x multiplier) to the smaller Bitcoin Friday futures provides traders of all sizes the right risk management tools to best meet their risk management needs.
One of the most notable developments in the last 16 years is the increasing involvement of financial institutions in the crypto space. It is no longer acceptable to not have a view on bitcoin.
Looking ahead: The future of bitcoin and crypto
As bitcoin turns 16, its journey reflects the growing integration of cryptocurrency into the global financial system. Looking forward, several trends are likely to shape the next phase of bitcoin and the broader crypto landscape.
- Regulatory developments: The regulatory landscape around cryptocurrencies continues to evolve, prompting institutions to adapt. Governments worldwide are now creating frameworks for cryptocurrency regulation, which have provided clarity and encouraged more institutional involvement. The European Union’s Markets in Crypto-Assets Regulation (MiCA) is a notable example of this regulatory evolution. As governments finalize regulatory frameworks, clearer guidelines will likely foster more institutional participation and innovation.
- Mainstream adoption: The integration of cryptocurrencies into payment systems by major companies could drive widespread adoption, making digital currencies a commonplace medium for transactions. Major banks have started forming partnerships with cryptocurrency firms.
- Technological innovation advances: Blockchain technology, including improvements in scalability and security, will continue to influence how cryptocurrencies are utilized in financial services. The emergence of smart contracts, decentralized finance (DeFi) and non-fungible tokens (NFTs) have emerged, showcasing the versatility of blockchain technology. The DeFi trend is likely to accelerate, allowing individuals to lend, borrow and trade without intermediaries. Financial institutions are increasingly exploring blockchain technology for its potential to streamline operations. Initiatives like cross-border payments, trade finance and settlement processes are being enhanced by blockchain, leading to reduced costs and increased efficiency.
- Legal tender: El Salvador became the first country to adopt bitcoin as legal tender in 2021. Variants of bitcoin’s technology are also making many financial products and services available to the masses at low cost, directly connecting savers and borrowers. These developments and the possibilities created by the new technologies have spurred central banks to consider issuing digital versions of their own currencies.
Conclusion
Bitcoin’s 16th birthday is not just a celebration of a revolutionary digital currency but also a testament to the rapid advancements in the crypto space. The increasing adoption of bitcoin by financial institutions signals a shift towards being accepted into the financial ecosystem. Furthermore, our regulated suite of Bitcoin futures and options remain the central tools for risk management for market participants.
As we look to the future, the lessons learned from bitcoin’s journey will undoubtedly inform the next chapters of cryptocurrencies and their role in the global economy.
Footnotes
All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
