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The increased expectations of an imminent futures-based ETF’s debut on the US markets have spiked activities on the CME this month even though many experts also attribute the new development to stronger participation from state-side institutional investors.
Global derivatives giant Chicago Mercantile Exchange (CME) saw the total amount of money locked in Bitcoin Futures contract soar to new highs on Friday as the Securities and Exchange Commission (SEC) approved futures-based exchange-traded funds (ETFs) linked to BTC.
According to data provided by bybt, the dollar value of open interest (OI), or the number of futures contracts traded but not liquidated with an offsetting position, was $3.64 billion on Friday, up more than double for the month. The previous lifetime high of $3.64 billion was set during the bull market frenzy back in February.
Data from Glassnode also shows that the total number of outstanding contracts on the CME has risen by 60% to 56,410. Along with bitcoin’s 40% climb to $62,000, the spread between the CME-based front-month futures contract, also known as premium or basis, and the spot price has risen from an average of 1% to over 16% this month.
The record numbers for the Chicago Mercantile Exchange, however, do not seem to surprise many as earlier last week, data provided by the crypto derivatives research firm Skew showed that Premiums have risen sharply within the month with the return of the bull to the crypto market.
QCP Capital, Asia’s leading Digital Economy Traders, after Skew published those data, stated:
“One key effect of a futures-based ETF is the possible increase in yield in the space. With the ETF funds forced to buy futures instead of spot, the futures premium would be driven higher. A ‘risk-free’ rate (cash and carry yield) of 10-20% could be the new norm.”
The increased expectations of an imminent futures-based Bitcoin ETF’s debut on the US markets have spiked activities on the CME this month even though many experts also attribute the new development to stronger participation from state-side institutional investors.
Martha Reyes, head of research at digital asset prime brokerage and exchange Bequant speaking on CME’s current boom in Bitcoin Futures interest stated that “Speculation about an imminent futures ETF really took off last week as the SEC had been uncharacteristically quiet ahead of the approval deadline for the first of the ETFs on October 18.”
Reyes added that US institutions particularly have been fueling the rally as evidenced by the recent activity on the CME as well as the basis flippening on the CME over the retail-led exchanges.
CME was the fourth largest last month but has captured the second spot now and is poised to see greater gains as total futures open interest across the globe has surged over $23 billion for the first time in five months.