CME Group Reveals a Surge in Institutional Interest in its Futures

The Chicago Mercantile Exchange (CME) Group is putting on a brave face for its Bitcoin futures product, claiming that a lot of big-name investors are still interested in it.

On October 9, 2019, the CME Group took to Twitter to affirm that it still has a strong demand for its CME Bitcoin futures product for the third quarter of the year, as the futures have seen a daily open interest of over 4,600 contracts. The firm’s tweet revealed that open interest in their futures contract is up by 63 percent over Q3 2018, while adding the increase to the surge in interest from institutional investors.

Despite the pullback in bitcoin prices, customer interest in CME Bitcoin futures remained strong during Q3 with daily OI of over 4.6K contracts, up 61% vs Q3 2018. https://t.co/MiMqZ52JmS pic.twitter.com/WiQBA0mK0o

— CME Group (@CMEGroup) October 9, 2019

Institutional interest is increasing

Essentially, the open interest of a financial product is the total number of outstanding derivative contracts that are yet to be settled. For Q3 2019, this number rose to 4,629 contracts on the CME Bitcoin futures, up from just 2,873 in the same period. CME pointed out that while Bitcoin has seen a quarter of its price erode, this number remains rather strong.

In addition to the increase in daily open interest, the average daily volume on the contracts traded in Q3 2019 was pegged at 5,534 contracts. This is around 10 percent from Q3 2018. According to the CME Group, this volume represents 27,670 BTC (around $289 million).

Institutional flow is also rising, according to the CME. The Group added 454 new contracts in the quarter, as compared with 231 contracts which were added in Q3 2018. There are now 47 entities that hold over 25 BTC, up from 45 in the second quarter of the year and 34 in Q3 2018.

CME is expanding

The CME Bitcoin futures contracts were launched back in December 2017, and while there was a similar offering from the Chicago Board Options Exchange (CBOE) at the time, the CME futures have been able to last longer. Now, the Exchange is looking to go further with its financial product, as it was announced in a September 20 press release that it will be launching options with its Bitcoin futures product in the first quarter of 2020.

In the press release, Tim McCourt, the Global Head of Equity Index and Alternative Investment Products at the CME Group, said,

McCourt added that the new products will be used to help institutions and professional traders to manage their exposure in the spot market, while also providing a regulated environment for them to hedge their Bitcoin futures. 

Bakkt is shaping up as well 

Of course, the CME futures have new competition in the physically delivered Bitcoin futures contract from Bakkt. Bakkt’s futures, which were launched on September 24, have seen some lackluster adoption, but things seem to be picking up quite nicely as well. 

On October 9, data compiled from Twitter account Bakkt Volume Bot showed that the volume of Bitcoin futures sold on the Bakkt platform soared to 224 contracts on the day, up 796 percent from the previous day. The data showed an increase in daily trading volume from 25 on October 8 to 224 on October 9; a trend which coincided with an increase in the Bitcoin price from about $8,200 to $8,600 as well.

Read more: 

• CME Previews the Contract Specs for New Bitcoin Options
• CME Bitcoin Futures Crosses $100m in Contracts Sold