Plenty of Bitcoin Futures Action at the Chicago Mercantile Exchange

Plenty of Bitcoin Futures Action at the Chicago Mercantile Exchange

It has been more than a year since the CME, a widely respected financial exchange market, launched a derivative trading product for Bitcoin speculators who are not too comfortable with putting too much “skin in the game.” Bitcoin futures contracts were expected to bring Wall Street investors closer to the world of cryptocurrencies, and they were almost simultaneously released by the CME as well as the Chicago Board Options Exchange. After a short-lived fanfare debut, Bitcoin futures contracts failed to live up to their initial hype; however, they have been influential in the mini-rally of April 2019.

If you are a Bitcoin futures investor, you already know this: on April 4, the CME handled $563 million worth of BTC contracts, a 950 percent volume increase in less than a week. More than 22,000 orders were processed, a drop in the bucket for a powerful trading platform such as the CME, but this was BTC after all. The last time such a high volume was experienced was February 19, when the CME experienced a surge of 18,000 BTC futures contracts in a single trading day. There is no question that BTC futures action at the CME are having a positive effect on the cryptocurrency markets, particularly when considering that most traders are going long in early April.

Large Exchanges Attract Investments

Cryptocurrency enthusiasts would prefer for CME investors to take the plunge, open digital wallets and put their money into tokens; after all, the aforementioned $563 million is a respectable amount when considering that the major digital currency exchanges traded about $684 million worth of BTC on April 4. Major Wall Street players such as institutional investors are known to be attracted to derivatives and proxy instruments when the underlying securities are considered to be exotic or too volatile, and this is the reason why the Intercontinental Exchange Group, owner of the New York Stock Exchange, is pushing for approval of a fully settled BTC futures contract. 

The ICE Group Bakkt project involves an instrument that Wall Street giants will certainly be interested in. When approved by the Securities and Exchange Commission, the instrument will allow traders to pay cash for their Bitcoin speculative positions, but they will be settled in actual BTC tokens. This instrument, which would be listed on the NYSE, would prove more attractive than the CME BTC futures, and it has a great potential to inject more liquidity into the cryptocurrency markets, thus increasing the likelihood of a rally.