CME Group Says Institutional Players Have Increased Appetite for Bitcoin Futures Contracts
Feb 4, 2020 at 11:23 am UTC by Tolu Ajiboye
· 3 min read
According to the CME Group, big institutional investors have increased their need for futures and options offerings by more than half.
The Chicago Mercantile Exchange (CME) Group, a global derivatives marketplace with a wide range of futures and options products, has said that in the last quarter, its Bitcoin futures offering has increased considerably in popularity. According to the CME Group its open contracts surged by 61 percent in number from the same period about a year ago.
The CME Group has said that the reason for this is a significant increase in demand from institutional entities that have increased their appetite for Bitcoin futures contracts. Specifically, the number of open interest or outstanding positions on the CME Group’s platform in 2018’s third quarter was exactly 2,873. A 61% increase means that this number has jumped up to 4,629. It might be important to note that this happened even with the disappointing price movement for Bitcoin in recent weeks. The CME Group said that the number of accounts being created is also consistently increasing.
“Institutional flow remained strong, with 454 new accounts added, compared with 231 added in the third quarter of 2018,” said the Group.
The exchange also noted there has been a 10 percent increase in the average daily contracts traded volume in the quarter, hitting 5,534. This represents about $289 million in 27,670 traded Bitcoins.
Last month, the CME Group applied to the Commodity Futures Trading Commission (CFTC), to authorize the Group to allow clients to double their open Bitcoin futures positions. Currently, traders are allowed 1,000 spot contracts monthly and if the CFTC agrees, this number is expected to hit 2,000.
The CME’s Bitcoin futures began two years ago in 2017 and has become the standard in the industry. However, since the launch of Bakkt by the Intercontinental Exchange (ICE), the CME now has to deal with a contender which was considered worthy enough, but hasn’t really lived up to expectation. Nevertheless, the Bakkt platform a few days ago, experienced a shocking surge within 24 hours.
According to Bakkt Volume Bot (@BakktBot), a Twitter account that tracks and monitors live Bakkt activity and trades showed that the number of contracts jumped from 25 all the way to 224, a surprising 796% surge, setting a new all-time high.
Daily summary of Wednesday's Bakkt Bitcoin Monthly Futures:
💸 Traded contracts: 224 (+796%) (New ATH 🚀) 📈 Day before: 25 🚀 New all time high: 224
Even though it is yet to be repeated, it feeds the general idea that with time, Bakkt could become the panacea for the Bitcoin market that it was initially purported to be. Bakkt officially went live on Sept 22 but is largely regarded as disappointing, so far. In fact, Bakkt was fingered by a Binance Research Report, as a major reason Bitcoin fell from around $10,000 all the way below $8,000.
A few days ago, the Bakkt Volume Bot also revealed that on Oct 12, just a little after midday, Bakkt traded contracts volume lost 46% and dropped to 59, 50 contracts less than the 109 it pulled in from the previous day.
Bakkt might currently be facing another problem at the moment.
Coinspeaker has discovered that, a few hours ago, the Bakkt platform might have been infected by a bug because it showed no chart data available and all the figures for its futures contracts dropped down to zero.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he's not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
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