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Demand Rising For Regulated Bitcoin Futures

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The volume of Bitcoin futures traded on the Chicago Mercantile Exchange (CME) has increased significantly in the past two months, even as overall futures activity declined during the same period.

CryptoCompare’s January 2019 study reported a significant growth in the number of Bitcoin futures contracts traded on the CME, as a share of the broader crypto futures market. Daily volumes increased by 20%, from $66.5M to $79.9M in January.

The overall volume of Bitcoin to USD futures traded on the regulated exchanges, CME and Chicago Board Options Exchange (Cboe), increased from 6.36% in December, to 11.7% in January. However, Cboe’s volumes actually decreased, falling from $10.7M to $8.1M, in the same timeframe.

SIMETRI Research

 

Regulated Bitcoin futures volumes
Source: CryptoCompare

 

Having increased marginally in December, the volume of futures trades against spot trades fell slightly, dropping from 28% to 24% of all trading activity in January. This is in line with the rest of the market; activity has been on a gradual decline, dropping from $300bn worth of monthly trades to just under $250bn between last November and January of this year.

Regulated Bitcoin futures volumes
Source: CryptoCompare

 

The growing volumes on regulated exchanges come at the same time as unregulated futures products, offered by BitMEX and bitFlyerFX, the market leader, declined. BitMEX volumes fell by 41%, taking average daily contract volumes down from around $1.7bn to just over $600M in January.

 

Regulated Bitcoin futures volumes
Source: CryptoCompare


Does it matter?

Futures contracts are agreements to buy an asset at a certain price at a point in the future. They can be used as a speculative tool, allowing traders to effectively place bets on future prices.

Cboe and CME had to wait for regulatory approval from America’s Commodity Futures Trading Commission (CFTC) before they could begin offering their XBT contracts. Platforms like BitMEX and Japan’s bitFlyerFX created their contracts without the same sort of green light from a regulatory body.

Even though the CFTC approved the Cboe and CME futures offering in December, Crypto Briefing found last June that total volumes were still very small and unlikely to have a significant impact on bitcoin’s market price.

Rising volumes for regulated bitcoin futures are bucking an overall trend for declining activity across the futures market, as to be expected in a bear market. But it’s not certain whether today’s findings could be the start of a shift towards regulated futures providers.

Constantine Tsavliris, CryptoCompare’s blockchain researcher and data analyst, highlighted that it’s still “too early to tell whether this is a significant trend.”

“Volumes on any regulated market generally see a reduction during the Christmas period, so this seasonal effect may be the likely factor for the December to January increase,” Tsavliris said in an email.


The author is invested in digital assets, including BTC which is mentioned in this article.

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DISCLOSURE

Authors at Crypto Briefing are invested in cryptocurrencies. The author of this post may be invested in digital assets mentioned here.

Paddy Baker
Paddy Baker
Senior Journalist Paddy Baker is based in London. His interests in global finance and cryptocurrency may seem at odds with his background as a lover of history - but he asserts that understanding the past is the key to understanding the future. Paddy lives a short bike-ride away from ten million other people, and has yet to be seen in public without his laptop.

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