Bitcoin drop tied to CME futures listing, Fed paper shows

SAN FRANCISCO, May 7 (Reuters) – Bitcoin’s drop in value from its December 2017 peak of $19,511 was tied directly to the listing of futures contracts tied to the cryptocurrency’s value, new research published by the San Francisco Federal Reserve showed Monday.

“The rapid run-up and subsequent fall in the price after the introduction of futures does not appear to be a coincidence,” four researchers wrote in the latest edition of the regional Fed bank’s Economic Letter.

Fed policymakers have been dismissive, particularly in recent months, of bitcoin’s promise as an alternative currency to the dollar or other central bank-backed money. San Francisco Fed President John Williams, who will next month move to New York to run the Fed there, has been particularly critical.

“One of the problems they have is the values are extremely volatile,” Williams said in April of cryptocurrencies in general and bitcoin in particular.

Trading in futures, which sometimes reduces volatility…