In addition to the crypto market, bitcoin is marking its spot in the derivatives market as well. Although bitcoin futures products have lost a platform, the bitcoin derivatives volume shows that losing a platform isn’t setting back bitcoin futures products from performing. The report revealed Chicago Mercantile Exchange (CME Group) saw record-breaking streams of bitcoin derivatives volumes.
This was witnessed when the Chicago Board Options Exchange (CBOE) announced in March that it will be ending support for the bitcoin futures product. However, rather upsetting the overall derivatives market, after the CBOE’s decision, Chicago Mercantile Exchange (CME Group) saw record-breaking streams of bitcoin derivatives volumes. During the second week of May, bitcoin futures on CME’s platform witnessed 33,000 contracts in a day which was a first for the exchange. It is estimated that those contracts valued over $1.3 billion.
CME Bitcoin futures reached an all-time record high of 33.7K contracts on May 13 (168K equivalent bitcoin), up nearly 50% from the last record of 22.5K contracts on April 4. See how market participants are using $BTC to manage uncertainty: https://t.co/hDgraMj5pe pic.twitter.com/ct1xkjoJDF
— CMEGroup (@CMEGroup) May 13, 2019
In March, CBOE issued a statement that revealed its plans for the future. The exchange informed that all currently listed futures such as XBTM19 were available for users till June. Expiring in June, bitcoin futures were introduced at CBOE in December 2017, almost at the same time when CME also decided to launch bitcoin futures trading on its platform. Now, while CME is continuing to offer futures trading, CBOE outlined low trading volume as the reason behind not listing additional XBT futures contracts. In the statement, CBOE elaborated:
CFE is not adding a CBOE Bitcoin (USD) (“XBT”) futures contract for trading in March 2019. CFE is assessing its approach with respect to how it plans to continue to offer digital asset derivatives for trading. While it considers its next steps, CFE does not currently intend to list additional XBT futures contracts for trading. Currently listed XBT futures contracts remain available for trading.
It’s quite surprising to witness that CBOE’s decision resulted positively for activity on CME’s platform. Last month, a total of 300,000 CME’s bitcoin futures contracts were settled. Confirmed by the Tradeblock in a report, the tremendous bitcoin futures trading volume in the last few months is suggested to be more than the combined volume in the previous 6 months. The report reads:
Beginning in April and May, however, bitcoin experienced a significant surge in price action; the asset traded to its highest levels in nearly one year. Futures trading volume during this same period has skyrocketed, as notional trading volumes over April and May saw higher levels than the previous 6 months combined.
Regarding CME outperforming in the bitcoin futures market while CBOE saw a steep decline, the report stated:
The CME’s product has even begun to close in on trading volumes at US accessible spot exchanges. For the month of April, bitcoin futures notional trading volume surpassed the combined volume from the six largest US accessible spot exchanges.
In addition to surpassing all previous records in the previous month, the future of CME with bitcoin futures seems very bright as well. According to bitcoin futures quote shared by the CME Group, the momentum from previous months is extending to the upcoming months. As per the quote, in addition to trading volume in June, contracts for July are also starting to pick up.
As there were a few noticeable gaps since futures trading began in 2017, current unfilled gaps hint about the presence of institutional traders. Under normal circumstances, gaps are usually filled at the end of the week but recent unfilled gaps suggest that institutional investors are hedging spot positions in bitcoin.
Nowadays, bitcoin is very active in the volatile crypto market. CME’s records show that there’s continuous movement in the bitcoin futures market as well. Besides high volumes in the past, the future for bitcoin futures for CME Group seems prospective as well. As the crypto market is flourishing green, the futures market is also experiencing substantial participation but as volatility remains a significant feature of the crypto market, let’s see where the crypto market leads the bitcoin futures market.