Considering everything that global financial markets have gone through in 2020, Bitcoin trading is looking more and more like an investment commodity worth evaluating, and this is clearly reflected by futures contracts at the Chicago Mercantile Exchange at this time. The interest in these financial instruments has increased exponentially over the last few weeks, and it seems as if institutional investors are seriously thinking about tapping this market.
Thus far in May, the trading volume of Bitcoin futures at the CME has jumped by nearly 1000%, and most of the transactions are short-term contracts that are both cautious and bullish; this is the typical style of many Wall Street investment banking firms, and it suggests the participation of institutional players. According to CME reports, more than $140 million worth of open interest futures contracts have transacted since May 8.
Market analysts believe that traders of Bitcoin futures may have been more active if not for the halving event of May 11, which kept cautious investors on the sidelines. Most of the action at this time centers on call options that speculate on the exchange rate of Bitcoin increasing as the rest of the month unfolds. It should be noted that even though Bitcoin trades around the clock, the CME holds trading sessions that follow Wall Street's schedule.
It is difficult to estimate whether the bullish sentiment of Bitcoin futures traders will continue to hold; however, this market is maturing to the point of having a more direct impact on cryptocurrency trading. Traders who base their market positions on technical analysis will always take a look at how futures traders are behaving. Something else to keep in mind is that Bitcoin futures traders tend to watch Wall Street very closely, and this includes watching how futures contracts on benchmarks such as the DJIA and S&P 500 are stacking up.
With more institutional investors turning to the CME for Bitcoin futures trading, there is a good chance that the cryptocurrency markets will benefit from increase volume and hopefully greater stability; however, this should not be taken for granted because implied volatility will always be around the corner.