CME bitcoin futures rally

The Chicago Mercantile Exchange Group claims it has hosted trading of over 2 million bitcoin futures contracts with $70 billion worth of volume since inception.

The derivatives marketplace said in a tweet Wednesday that it traded over 2 million contracts – which equals more than 10 million bitcoins – from December 2017 until July 21. It believably attracted clients as interest in bitcoin climbed higher after its 200 percent climb this year. That also coincided with the decision of Chicago Board Options Exchange (Cboe) – a competition –to stop offering bitcoin futures contracts.

Volume update: As of July 23, CME Bitcoin futures have traded over 2M total contracts (10M equivalent bitcoin) since the December 2017 launch. Explore BTC:

— CMEGroup (@CMEGroup) July 23, 2019

CME started posting a higher number of contracts since May, the month that saw bitcoin spot rate closing above a psychological resistance level of $6,000. As on May 13, the exchange had posted 1.3 billion worth of BTC futures contracts. A week later, the number of contracts touched its all-time high of circa 5,190.

cme, bitcoin

CME Bitcoin Futures June Stats | Image Credits: CME

The trend improved further in June. CME reported that its bitcoin futures reached “a record $1.7 billion in notional value traded on June 26, surpassing the previous record by more than 30 percent,” adding:

“The surge in volume also set a new open interest record of 6,069 contracts as institutional interest continues to build.”

Bitcoin futures at CME are ideal for investors who do not want to hold bitcoins but want to speculate on its value via regulated platforms. That further means that all the bitcoin futures contracts get settled in physical cash upon expiration, not in the cryptocurrency itself. Often criticized by the cryptocurrency community for not adding anything beneficial to the real bitcoin market, futures are still considered a metric to gauge mainstream investors’ interest in the cryptocurrency.

Bitcoin-Settled Contracts Coming Soon

Bakkt, a bitcoin futures platform backed by Intercontinental Exchange (ICE), on Monday began the testing of its daily and monthly contracts. That marks the beginning of the first bitcoin-settled future in the real-world which, as experts believe, would boost the demand of the cryptocurrency among institutional players.

While Bakkt goes ahead with its plans, LedgerX and ErisX are also going to launch their bitcoin-settled futures contracts. Neither firm has announced the release date of their products.

The trio nevertheless is likely to hit a minor snag when it comes to scoring a regulatory approval. Bakkt, for instance, is launching a self-certified bitcoin futures contract. It is then up to the Commodity Futures Trading Commission to approve or reject the product based on its merits. If approved, Bakkt would need to seek the controversial BitLicense from the New York Department of Financial Services (NYDFS).

On the brighter side, NYDFS has introduced a special division for the cryptocurrency industry to streamline their applications smoothly.

Do you think tradeable futures offerings are good for Bitcoin? Let us know your thoughts in the comments below 

Images via Shutterstock, CME, Twitter: @CMEGroup

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