CME bitcoin futures trading has grown each quarter since start

Posted: 18 October 2018 4:50 pm
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The market downturn hasn't dampened interest.

Chicago Mercantile Exchange (CME) bitcoin futures trading volumes have grown steadily quarter-in-quarter since their inception in December 2017, around peak crypto mania.

While retail interest in bitcoin and cryptocurrency may have peaked at that time and then dropped throughout 2018, more sophisticated traders might have tested the crypto-waters more slowly and found it to their liking.

From Q1 2018 to Q2, average daily volume grew by 93% while open interest (the number of open contracts) grew by 58%.

In broad strokes, one might interpret volume as how much money is being put into the market and open interest as how many traders are getting involved in the market. So with both volume and open interest growing, but volume growing more, one might interpret this as an indication that more traders are getting involved, and that the average trader is putting more money into CME bitcoin futures as time passes.

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This suggests that CME traders are generally having a pretty good time and getting more deeply involved throughout the year.

A similar trend was seen from Q2 to Q3, with average daily volume rising 41% and open interest up 19% over Q2.

Despite all the interest, it's been suggested that CME bitcoin futures don't necessarily have any reason to make bitcoin prices rise. In May, the Federal Reserve Bank of San Francisco published a study suggesting that CME bitcoin futures were suppressing bitcoin prices, rather than raising them, by giving traders a way of profiting on a fall.

Its study points at historically similar events, and notes that bubbles, such as the tulip bubble, have historically tended to burst after the introduction of futures contracts and that the arrival of CME futures correlated closely with the bursting of bitcoin's bubble.

It might not be that simple though, with CME bitcoin futures just being one part of the market. Other platforms have been offering bitcoin futures in much higher volumes for a long time before CME arrived on the scene.

However, as an established name appealing to sophisticated traders, CME might be able to wield an outsized influence on the market.

If one thing's clear though, it's that institutional interest in bitcoin has only grown throughout the year. Exchanges have been fielding more institutional interest than ever before, and others like Grayscale have noted that price drops have actually been great for business, with people apparently perceiving each drop as a solid buying opportunity.

Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VET, XLM, BTC and ADA.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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