PREVIEW-Bitcoin hits a bigger Wall Street stage as exchange giant CME launches futures

launches futures@ (Adds opening bitcoin future price, quotes)

NEW YORK, Dec 17 (Reuters) - CME Group Inc, the world's largest derivatives exchange operator, became on Sunday the second exchange to launch bitcoin futures trading, seeking to capitalize on the mania for the booming digital currency.

The CME bitcoin futures opened at $20,650 and have so far traded as high as $20,650 and as low as $19,315 in a session that extends overnight into Monday.

The new contract was recently at $19,480 on CME, while the week-old bitcoin futures contract at the Cboe was last trading at $19,500, up 7.7 percent on the day.

The seed price, or the reference price from which price limits are set, is $19,500 for the January contract, $19,600 for February, $19,700 for March and $19,900 for June, according to CME.

Bitcoin recently traded down 1.9 percent on the Bitstamp exchange at $18,818.82.

The launch of bitcoin futures is viewed as a major step in the digital currency's path toward legitimacy that should ease the entry of big institutional investors.

"We saw a nice open on light volume, but pretty uneventful so far. I do think we could certainly pick up in volume as Asia begins to open. This is a brand-new asset class and I think perhaps a lot of investors want to sit back and see how this plays out before dipping their toes in this market," Spencer Bogart, partner at Blockchain Capital LLC, said shortly after trading began on Sunday.

Bitcoin was set up in 2008 by an individual or group calling itself Satoshi Nakamoto, and was the first digital currency to successfully use cryptography to keep transactions secure and hidden, making traditional financial regulation difficult if not impossible.

Last week, Chicago-based derivatives exchange Cboe Global Markets launched bitcoin futures, which saw the price surge nearly 20 percent in its debut, notching 4,127 contracts during its first session.

Volume was close to 1,400 contracts on average during the rest of last week.

In contrast, trading volume in the Cboe volatility index futures typically runs in the tens of thousands to more than 100,000, market participants said.

The decline in bitcoin futures volume had been expected, analysts said, given concerns about the cryptocurrency's underlying volatility.

Some investors believe the CME bitcoin futures could attract more institutional demand because the final settlement price is culled from multiple exchanges.

The Cboe futures contract is based on a closing auction price of bitcoin from the Gemini exchange, which is owned and operated by virtual currency entrepreneurs and brothers Cameron and Tyler Winklevoss.

The general sentiment in the market remains one of caution and that has been reflected in margin requirements for the contracts.

In the futures market, margin refers to the initial deposit made into an account in order to enter into a contract.

The margin requirement at CME is 35 percent, while at Cboe, it is 40 percent, reflecting the cryptocurrency's volatility. The margin for an S&P 500 futures contract, by contrast, is just 5 percent, analysts said.

One futures trader said the average margin for brokers or intermediaries on bitcoin contracts was roughly twice the exchange margins.

(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Jennifer Ablan and Rodrigo Campos; Editing by Peter Cooney)