CME Bitcoin Futures See $100 Million in Volume During Monday Debut

CME Bitcoin Futures See $100 Million in Volume During Monday Debut

Dec 20, 2017

The Chicago Mercantile Exchange (CME) processed approximately $100 million worth of bitcoin futures contracts during the product’s first full day of trading on Monday.

CME Bitcoin Futures See $100 Million in First-Day Volume

As Strategic Coin reported, last week’s launch of bitcoin futures on the Chicago Board Options Exchange (CBOE) heralded a new era for the cryptoasset industry. However, volume was relatively thin, a product both of the asset’s nascence and the exchange’s size.

Consequently, traders looked with anticipation to December 18, when CME — the world’s largest derivatives exchange — would hold its first full day of bitcoin futures trading.

CME’s bitcoin futures debut did not disappoint. As was the case with CBOE, the first day of trading was relatively orderly. Altogether, the exchange processed 1,088 contracts — each equivalent to five bitcoins — worth approximately $102 million, according to CME’s Bitcoin Reference Rate (BRR).

cme bitcoin futures
Source: CME Group

The bitcoin price traded down after CME’s bitcoin futures debut, but Blockchain Capital’s Spencer Bogart said he did not believe this was the result of institutional investors shorting the market.

Writing on Twitter, Bogart said that he thinks speculators “piled into [the] spot market ahead of [the] futures launch” on the accurate assumption that the bitcoin price would rise leading up to their debut. Once the futures officially began trading, the speculators exited those short-term positions, reaping quick profits and putting downward pressure on the spot market.

The Tail Isn’t Wagging the Dog, Yet

As evidence, Bogart pointed to the fact that — even at $100 million — CME’s future volume was minor compared to the global spot market. In fact, it would barely rank among the top 50 highest-volume spot bitcoin exchanges.

Altogether, the global bitcoin spot market saw nearly $15 billion worth of trading volume on Monday, according to data from CoinMarketCap. This was not an isolated phenomenon. Spot bitcoin volume has exceeded $10 billion every day since December 6, and one must go all the way back to January to identify a date when global bitcoin volume did not cross the $100 million threshold.

Even within the narrow U.S. market, futures volume was eclipsed by spot trading. GDAX, a professional cryptocurrency trading platform operated by U.S. bitcoin brokerage firm Coinbase, processed more than $500 million alone.

Consequently, while it is likely that bitcoin futures volume will increase over time as investors become acclimated to the new markets, it is unlikely that these exchanges will see enough volume to have a profound effect on the spot price of bitcoin — at least within the near future.

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Featured Image from Reuters