The world’s largest options and futures exchange, Chicago Mercantile Exchange & Chicago Board of Trade (CME Group) and its bitcoin futures contracts saw an all-time high on May 13. According to CME’s records, the exchange recorded 33,700 contracts on Monday which represented a notional value of around 168,000 BTC ($1.35 billion).
CME Sees Over $1B of BTC Futures Contracts Traded
CME Group’s bitcoin futures contracts soared on Monday at the same time that crypto spot markets saw record volumes. Over the last few months, more interest has been aimed at cryptocurrency derivative products. For instance, during the second week of April, bitcoin cash (BCH) futures started rising significantly prior to recent BCH price appreciation. Crypto Facilities and executive Sui Chung detailed how BCH contracts in March saw close to $50 million in volume. During the same week on April 4, CME group saw its first record of roughly 22,500 BTC future contracts. On May 13, the options and futures exchange announced:
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.
The options and futures exchange also saw a large uptick in BTC futures volumes in February. Despite the increased trade volume, the derivative markets providers reported a net income loss of 17% for Q1 on May 1. BTC contracts, however, are pretty high on May 14 as well with 22,234 contracts as the day’s volume is nearing the April 4 record.
Bakkt’s Physically Delivered Bitcoin Futures Will Launch Soon
The news also follows an announcement from the Intercontinental Exchange and its Bakkt Bitcoin Daily Futures Contract products. Bakkt CEO Kelly Loeffler updated the public on Monday in regard to the physically delivered bitcoin futures contracts that have been delayed month after month. According to Loeffler, user acceptance testing for the bitcoin futures custody and trading is planned for July but Bakkt could get approval from the Commodity Futures Trading Commission (CFTC) within the next 10 days.
“Bakkt will contribute $35 million into the clearinghouse risk waterfall,” Loeffler noted. “This puts our own ‘skin in the game’ and aligns our interests for market integrity and safety with market participants.” The Bakkt CEO added:
For physical delivery and secure storage of bitcoin, an integrated custody service will be fulfilled by Bakkt’s qualified custodian, subject to regulatory approval. Safekeeping will be supported by insurance, cybersecurity, and comprehensive compliance, including an anti-money-laundering program and blockchain analytics.
While Spot Market Prices Rise, Institutional Interest in Crypto Gathers Momentum
The recent magnitude of futures volumes for both BCH and BTC has correlated with parabolic price rises for both digital assets. For instance, bitcoin cash is up 31% over the last seven days while bitcoin core is up 35% for the week.
In addition to this, futures markets and institutional interest have been gathering momentum. Steven Quirk, executive vice president at TD Ameritrade, told the audience at the Consensus 2019 conference that 60,000 clients have called or emailed because they are interested in trading futures products tethered to digital assets. Quirk added:
As soon as you open the door, you’re going to get a lot of people looking to participate in the market.
Monday and today’s CME Group futures volumes show interest in these products continues to grow and when other companies latch onto this trend they’ll also want in on these offerings. A lot has changed since CME Group launched its bitcoin futures service in December 2017 and it seems investors are still very attentive when it comes to crypto derivatives products.
What do you think about the recent futures action lately tied to the cryptoconomy? Let us know in the comments section below.
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Author: Jamie Redman