With bitcoin looking volatile around the $10,000 area, an increasing number of traders turned to CME futures linked to the largest digital currency last month.
Bitcoin futures debuted on the Chicago Board Options Exchange (CBOE) in December 2017 with CME Group following suit just a few days later. The derivatives linked to the largest digital currency by market value are seeing a steady rise in activity.
“CME Bitcoin futures hit $1.7 billion in notional value traded on June 26, a 30% increase from its last recorded high. The open interest for BTC futures now sits at 6,069 contracts, reportedly as a result of institutional interest,” reports Zero Hedge.
Derivatives help increase liquidity and improve markets for an asset category by allowing investors to bet on ups and downs of an asset, even allowing individuals to adopt market-neutral strategies. They are also a key component in the creation of many futures-backed ETFs utilized by a range of investors.
Bitcoin is Back … Sort of
One of the biggest problems facing the cryptocurrency space is that, even with bitcoin’s prominence, no digital currencies can be deemed “widely accepted.” While bitcoin futures in the U.S. got off to slow starts in late 2017 and early last year, data confirm that situation is changing.
“A week prior, on June 21, CME bitcoin futures broke $10,000, according to data on TradingView. Just one day prior to that, on June 20, the CME Group posted another record high of 5,311 open futures contracts totaling 26,555 BTC — approximately $280 million at press time,” according to Zero Hedge.
Still, the crypto currency remains volatile as evidenced by its recent decline after running through the $13,000 area.
“The value of the cryptocurrency BTC itself is hovering around $10,500 at press time. Bitcoin peaked around $13,800 last week, but failed to hold at $12,000 after temporarily trading sidewise in that range on June 28 and June 29,” according to Zero Hedge.
As more crypto traders and users embrace bitcoin, the potential exists for some smaller alt coins to see competitive pressure and fold.
For more news and analysis on bitcoin, visit our Bitcoin category.