Futures contracts on Bitcoin are at a historically high level, and this trend could carry over to the cryptocurrency exchanges. According to market reports published by Coinbase in early June, futures traders at the Chicago Mercantile Exchange are bullish on Bitcoin, and the number of open contracts suggests that trading of this instrument is gaining popularity. As of June 3, nearly 5,200 BTC futures contracts were open at the CME, which represents a 7 percent increase on a week-to-week basis.
Another trend emerging at the CME consists of traders taking longer positions around the $8,000 mark. A few positions are calling for BTC/USD to reach $10,000 over the next few weeks, and the more speculative contracts hover around $15,000. In the previous month, CME officials posted record trading volumes of BTC futures, a sign that this instrument is becoming more visible among traders. It should be noted that the CME is not the only platform for Bitcoin futures; the rival Chicago Board Options Exchange also offers trading of these contracts.
Bitcoin futures work similar to other contracts on commodities and foreign currency pairs. These instruments are regulated by the United States Commodity Futures Trading Commission, and they are settled in U.S. dollars. BTC futures are ideal for traders who do not want to leave too much "skin in the game," which means that they wish to mitigate the risk of holding cryptocurrency in a volatile market. The CFTC is in a position to determine Ethereum and other major digital currencies to be commodities, thus opening the door for approving their trading in derivatives exchanges such as the CME and CBOE.
Another reason traders are attracted to BTC futures is that they can take short positions; in other words, they stand to profit from tokens losing their value on the cryptocurrency exchanges. As of June 2019, long calls outnumbered short BTC positions at the CME, and this is directly related to the overall bullish sentiment by traders who are hoping to see BTC/USD reach the $10,000 mark this year. Institutional investors are more interested in the possibility of cryptocurrency exchange-traded funds (ETFs), but these instruments have not been approved by the Securities and Exchange Commission.