When Cboe and CME launched their Bitcoin futures products last year, many saw it as a monumental occasion for the digital currency. After nearly a decade on the fringes of the financial system, mainstream investors were finally welcoming Bitcoin.
The event was front-page gossip on the Wall Street Journal, and pundits across the internet fought to accurately predict just how transformative this investment opportunity would be. Some thought that futures contracts would be a short step to broader adoption among big banks and others saw it as a way to get traditional stock investors engaged in crypto markets.
Everyone thought they would be indelibly popular.
In reality, crickets…
To be sure, the initial wave of interest was robust. On their first day of trading, Cboe ‘s website almost immediately crashed as investors rushed to pick up this new investment opportunity.
It had all the trappings of a new iPhone release if iPhones became unpopular within a week.
Since then, Bitcoin futures markets have received little attention from investors or pundits. The collective attention of the crypto community turned to the rapidly digressing markets and impending fears about regulation.
Record-Setting Daily Volumes
On Tuesday of last week, Bitcoin Futures roared back to life. They enjoyed their highest daily volume since they launched back in December.
The numbers are impressive. According to Kevin Davitt, senior instructor at the Cboe Options Institute,
“May futures traded 18,210 contracts and…a total of 19,000 Bitcoin Futures traded here [on Wednesday].”
Investors traded more than 4,000 more contracts than the previous, January 17th, high session. This was the first expiration for Bitcoin Futures, and those contracts anticipated a 20% reduction in Bitcoin’s price.
According to the Cboe’s official Twitter account, Bitcoin Futures traded at three times their average daily volume.
$XBT #BitcoinFutures highest daily volume – 3X normal ADV, @kpdavitt13 details high volume & ranges in the underlying, #Cryptocurrency trending higher: #bitcoincash $BCH, $EOS market cap https://t.co/3ZUS3ZwPxT #crypto
— Cboe (@CBOE) April 26, 2018
CME featured a similar upswing on their Bitcoin Futures contracts. According to a Thursday Tweet by the exchange, they traded 11,000 futures contracts on Wednesday. The average daily volume on CME is less than 4,000.
Interestingly, although Bitcoin can be famously volatile, the high-to-low trading differential is near 10%, about half of what it was in other months.
Bitcoin Futures are trading near 500 points higher than they were last week. In the past, these contracts become more popular as their expiration date approaches. However, this batch of contracts is not imminently expiring.
The sudden popularity of Bitcoin Futures reflects a reemerging bullish sentiment by figures such as Tom Lee, Tim Draper and others across the broad crypto spectrum.
Many coins have seen their prices increase in the past week after a significant market pullback following the first of the year.
Unlike cryptocurrency exchanges that are always operational, the Cboe and CME exchanges are only open during set hours on weekdays.
They are populated by institutional investors, so it’s tempting to consider Wednesday’s activity as an indication that institutional money is beginning to flow to cryptocurrencies.
Of course, it’s also possible that Wednesday’s trading spike was merely an aberration that will either correct or go unrepeated. Regardless, after months of stagnation, it’s clear that through record-setting daily volumes, investors are expressing a renewed interest in the futures market.
Cover Photo by Jakub Gorajek on Unsplash