The average daily trading volume of bitcoin futures at the Chicago Mercantile Exchange (CME) in Q3 increased by 41%.
In Q3, Bitcoin futures average daily volume rose 41% and open interest was up 19% over Q2 . Learn how market participants are using BTC to manage risk in changing markets. https://t.co/Yt41SzsHku pic.twitter.com/Kw4OX0QaKT
— CMEGroup (@CMEGroup) October 17, 2018
The company has posted data on Twitter. As the chart shows, the average daily futures volume exceeded 5,053 contracts in Q3, indicating a 41% increase from 3,577 contracts in Q2. The data also indicates a 170% growth against the first quarter with 1,854 contracts. The amount of Open Interest (OI) also showed a positive trend compared to the second quarter and grew by 19%, amounting to 2,803 contracts.
Recall, the CME began trading in bitcoin futures in December. Trades are conducted on the CME Globex platform on a cash settlement basis and are based on the CME CF Bitcoin Reference Rate (BRR), the reference bitcoin rate against the U.S. dollar, compiled by the CME Group on Bitstamp, GDAX, itBit, and Kraken data.
Similar Bitcoin futures trading was launched on the Chicago Stock Exchange (CBOE). And in April of this year, the CBOE announced a record volume of trading in bitcoin futures. Then the number of transactions exceeded the average daily rate (6,600) in almost three times.
It is worth noting that before the introduction of bitcoin futures, major hedge funds and institutional investors had limited access to the cryptocurrency market. The main advantage of this tool is the exchange guarantee for a refund. The investor gets an opportunity to avoid risks.
Futures trading, regardless of the subject of contracts, is clearly regulated, and therefore much more attractive to big investors. Futures are used not to maximize profit, but to hedge the risks associated with price changes. And bitcoin is highly volatile. With the release of futures, institutional investors came to the market who were not ready to trust unregulated exchanges.
But when the futures started trading in December last year, Bitcoin lost 51% in price. Some experts believe that institutional investors were able to legally “short sell” bitcoin, which they used. In response, the managing director, global head of equity products and alternative investments at CME Group Tim McCourt said that bitcoin futures contracts exert no pressure on the price of the first cryptocurrency.
He explained that this tool represents only a small part of the market. McCourt added that CME launched cryptocurrency derivatives in response to the market demand. Users wanted to get a comfortable financial instrument with risk control on the regulated exchange and they received it. Tim McCourt also noted that the Bitcoin futures market continues to grow, and this is especially noticeable in terms of volume in Asian markets.
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