[2018-04-27] $670 Million: Bitcoin Futures Post Record Daily Volume

[nickbelski]

Bitcoin futures volume reached an all-time high on Wednesday, peaking near a combined $670 million between regulated US exchanges CME and CBOE.

On Chicago exchange CME, traders exchange more than 11,000 contracts, worth an equivalent 56,010 BTC. According to CME’s Bitcoin Reference Rate (BRR) for April 25, those contracts equate to more than $497 million in single-day volume. Of course, the actual dollar value of those contracts most likely diverged from that figure slightly, as prices fluctuated throughout the trading session.

This means that on Wednesday, CME ranked as one of the world’s 10 largest cryptocurrency exchanges — larger than many spot trading platforms that offer a significant number of altcoin trading pairs.

It’s particularly remarkable considering that, unlike spot exchanges that operate around the clock, CME only offers trading during specific business hours.

The exchange also noted that average daily volume has increased by 250 percent since it listed its Bitcoin futures product in December, indicating that the spike is more than just a single-day fluke. April’s average daily volume is 3,716 contracts, equivalent to 18,580 BTC. That’s a 44 percent increase since March.

This rapid increase in trading volume has not been isolated to CME.

Fellow Chicago-based exchange CBOE — the first regulated US platform to list Bitcoin futures — saw 19,000 contracts (each worth 1 BTC) traded on its platform on Wednesday, which works out to roughly $168 million according to the BRR. This was not only a record for CBOE but was also triple the exchange’s average daily volume for this product.

Significantly, CBOE noted that this record volume correlated with neither a contract expiration date nor exceptional price volatility, as previous volume spikes have been.

Futures are primarily (though not exclusively) traded by institutional investors, so rising volumes for these products could be an indication that institutions are beginning to take a more active role in the cryptoasset space.

Abra CEO Bill Barhydt recently said that “all hell will break loose” once institutional investors begin to allocate meaningful capital to investments in the industry, and numerous insiders believe their presence will drive the Bitcoin price to record levels.

Source: https://www.ccn.com/670-million-bitcoin-futures-post-record-daily-volume-as-market-recovers/

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[1Referee]

This is actually quite an impressive form of progress, and that while I have been quite skeptical about these Bitcoin tied futures initially. It will be interesting to see when we're a few years away from now, if these futures will be similarly important as they currently are to the traditional markets. If at some point institutions are ruling the Bitcoin markets, which is a likely scenario, then it may actually happen.

I do however like the external uses of futures, especially when it comes miners looking to sell their coins at consistent rates, without having to worry about short term volatility. It's still somewhat of a gamble for buyers, but that's a risk worth taking for them, especially if they are long term minded, otherwise there is no point in settling a contract between the buyer and the seller. In this case you actually get to own what you buy, which isn't the case with regular futures being traded on CBOE and CME.