Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
The CME Group has seen a massive surge in open interest for Bitcoin Futures contracts that also hints towards rising institutional participation.
June also turned out to be a record-breaking month for Bitcoin Futures provider the CME Group which witnessed a massive surge in open and new account sign-ups on its platform. The CME Group started offering its Bitcoin Futures contracts during the crypto mania of December 2017.
Since then, CME has traded more than 2960 Bitcoin Futures contracts across different time zones and client types. After the crypto winter of 2018, CME is again seeing a massive surge in demand for Bitcoin Futures. There’s a 30 percent in total client sign-ups with nearly 1000 sign-ups so far, in 2019 itself.
With the growing institutional demand, the open interest for Bitcoin Futures has reached a record of 6069 contracts in June. Moreover, as on June 26, the notional value of Bitcoin Futures traded has hit a record $1.7 billion. Open interest basically hints at the total number of outstanding derivative contracts yet to be settled and thus are currently open.
CME Bitcoin futures reached a record $1.7B in notional value traded on June 26, surpassing the previous record by more than 30%. The surge in volume also set a new open interest record of 6,069 contracts as institutional interest continues to build. $BTC https://t.co/WqXSPX0raR pic.twitter.com/HjGKb9a0ah
— CMEGroup (@CMEGroup) June 28, 2019
As reported by CoinDesk, the number of large open interests i.e. clients holding contracts worth 25 BTC and above has jumped from an average of 46 to 49 in the last week of June. A CME spokesperson told the publication that the open interest for BTC Futures is skyrocketing in all four expiries. This means that the CME Group “is creating a forward curve for the crypto markets so that investors can better manage price”.
Crypto Participation on the Rise
This year, the crypto industry has seen growing participation from traditional financial players. A number of players are wanting to offer the Bitcoin Futures contracts. ICE’s Bakkt will also start testing its futures contracts ahead this month, and will be available to investors in a short period of time.
Speaking to CoinDesk, Gareth MacLeod, partner at Gryphon Labs, said:
“It’s most likely traders in the traditional finance industry using CME to take a long position off of news about Libra.”
Crypto’s inherent volatile nature has caused several traditional institutions to stay away from it for a long time. However, Bitcoin futures provide a way for them to bring stability and reliability thereby reducing risks while operating large amount portfolios.
McCleod stated that big financial institutions and other professional traders prefer to operate in a particular way like the Bloomberg terminals. There are also a few developments with respect to the regulatory process.
Recently, the U.S. Commodities and Futures Trading Commission (CFTC) gave license to LedgerX to be the custodian of physically-settled Bitcoin Futures contracts. Also, crypto exchange Binance recently announced to launch its “crypto futures” platform providing 20x leverage to traders.