The two official trading platforms for trading Bitcoin futures contracts, the Chicago Mercantile Exchange and the Chicago Board Options Exchange, are making cryptocurrency news headlines this week, but for completely different reasons. While the CBOE has settled its final Bitcoin futures contract because executives believe that offering these instruments are no longer viable for the time being, the CME has posted record trading volumes.
The number of open Bitcoin futures contracts at the CME exceeded 5,300 on June 17, thereby setting a new historical record. It should be noted that the last time BTC futures reached an all-time high at the CME was just two weeks ago. The collective value of these contracts as of this time is about $265 million.
Even though most BTC futures contracts are traded by individual investors, CME executives have reported that institutional interest is on the rise, and there are a couple of reasons for this trend. First of all, Bitcoin is a digital currency on the rise; in fact, analysts believe that it will reach the $10,000 mark by the end of the second quarter. Second, the CME is prepared to welcome traders looking for Bitcoin futures contracts action in the wake of the CBOE termination of trading.
When the prospect of trading BTC futures was formulated by derivatives dealers, the CBOE was the first to obtain regulatory approval from the United States Securities and Exchange Commission; nonetheless, the CME proved to be the most robust platform. Now that the parent company off the New York Stock Exchange has presented a proposal for a Bitcoin exchange- traded fund, the CME will likely increase marketing of its BTC futures among institutional investors, particularly those that prefer to settle contracts in U.S. dollars instead of cryptocurrency.
The relative advantage of Bitcoin futures contracts is that they offer a way to speculate on the cryptocurrency market without putting "skin in the game," meaning that investors do not actually hold tokens when they take market positions. Still, these instruments present a significant amount of risk, and they not recommended to beginners because they can expire without value after a certain date accorded by the contract.