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Open Interest for CME Bitcoin Futures doubles in January 2020



The first few days of 2020 have opened on a high note for bitcoin with rapid price increases setting the stage for a bull market. Now, it appears that the Bitcoin’s New Year cheer has spread to the futures market.

Data shows that open interest in Chicago Mercantile Exchange (CME) Bitcoin Futures grew by 100% in the first few days of January as compared to December 2019. On January 17, there were 5,239 open futures contracts on CME worth about $235 million compared to 3,322 contracts worth $110 million recorded in early December.

CME futures average daily volume and open interest (Source: CME Group)

Open interest refers to the total amount of the futures contracts that are yet expire, be exercised or physically delivered.

Interestingly, open interest in the futures rose alongside the bitcoin price indicating that the market is in an upward trend. Bitcoin was on a downward trend for most parts of December bottoming out around $6,440. Since then it has risen with the price hitting a 2 month high of $9,100 on January 20. At the time of writing, Bitcoin was still on course its upward trend trading at around $8,600, a price 20% higher than it was one-year-to-date.

Interest in bitcoin futures keeps growing with the market particularly triggered by the launch of options trading. Open interest rose sharply in the days preceding the launch with over 5,000 contracts in the initial 4 days, a figure that rose to over 17,000 contracts five days prior to the launch.

The run continued post launch with $2.3 million worth of contracts recorded on the first day of trading; a figure which more than doubled to hit $5.3 million by end of the first trading week.

The increased activity in bitcoin futures trading is a reflection of the increased institutional interest in digital assets. They provide a formal and structured approach to investing in this new asset class whilst accelerating bitcoin’s recognition as a conventional asset. CME agrees with this position with their managing director Tim McCourt, posting on Linkedin

CME’s product has evolved over the last two years and is now one of the most liquid, listed bitcoin derivatives globally. We have seen strong participation from institutional investors, physical bitcoin traders and other clients who value the transparency, price discovery and risk transfer that only a regulated marketplace like CME Group can offer.

This message rings true as exchanges also recorded more activity during the same period. According to Skew, on January 14 the global futures trading volume rose above $25 billion; the highest figure since October 26.

Image Courtesy of Marco Verch on Flickr



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