Bitcoin Futures Trading Gains Momentum

Trading in bitcoin futures contracts continue to gain popularity among speculators in the US futures market, according to recently released figures from futures marketplace CME Group.

During the third quarter this year, the exchange saw an average daily trading volume of 5,053 bitcoin futures contracts. On CME’s market, each bitcoin contract represents 5 bitcoins, which means that contracts worth a total of 25,265 BTC (USD 163 million) changed hands every trading day.

Trading volume rose by 41% since last quarter, in what has been a fairly constant rate of increase since bitcoin futures were first introduced on the CME exchange in December 2017.

Meanwhile, so-called open interest, meaning the amount of new money that is flowing into the market, also increased by 19% since the last quarter. Generally, increasing open interest is seen as a sign that market participants are taking a greater interest in a market, strengthening the already existing price movements.

In the case of the bitcoin market, this could mean that the current “range-bound” pattern in the market is being reinforced by trading taking place in the futures market.

The introduction of bitcoin futures trading on CME Group’s exchange on December 17, 2017 coincided with the peak in bitcoin prices last year, when bitcoin hit nearly USD 20,000 on several cryptocurrency exchanges. Trading on CME’s market followed the launch of the first-ever bitcoin futures market on the Chicago Board Options Exchange (CBOE) one week earlier.

However, futures were blamed for Bitcoin’s fall from its peak.

“The rapid run-up and subsequent fall in the price after the introduction of futures does not appear to be a coincidence. It is consistent with trading behavior that typically accompanies the introduction of futures markets for an asset,” according to research from the San Francisco Federal Reserve.