The Chicago Mercantile Exchange (CME) Group recently tweeted that, despite the Bitcoin (BTC) price pullback, customer interest in CME Bitcoin futures remained strong during Q3 2019.
CME Bitcoin futures are up 61% vs Q3 2018
On Oct. 9, the CME Group took to Twitter to state that customer interest in CME Bitcoin futures remained strong during Q3 2019, with daily open interest (OI) of over 4,600 contracts, up 61% vs Q3 2018, because of the strong interest of institutional investors.
Open interest refers to the total number of outstanding derivative contracts that have not been settled, which rose to 4,629 contracts, up from 2,873 in Q3 of 2018. CME pointed out that this occurred despite the fact that Bitcoin has dropped almost 25% in price.
CME is adding options to its Bitcoin futures contracts in the first quarter of 2020, pending regulatory review. The CME Group global head of equity index and alternative investment products, Tim McCourt, said at the time:
“Based on increasing client demand and robust growth in our Bitcoin futures markets, we believe the launch of options will provide our clients with additional flexibility to trade and hedge their bitcoin price risk.”
McCourt said trading had picked up for the Bitcoin futures, with May being a record month, where 34,000 futures contracts were traded, worth $1.3 billion and equivalent to 170,000 BTC. Meanwhile, institutional interest in CME Bitcoin futures peaked in early summer 2019, with a record 56 large open interest holders reported in July.
In an SCMP report, McCourt said that he expects futures trading volume to also come from miners seeking more precise exposures, and not just from traders, adding:
“While futures give you a one-for-one exposure […] an option gives you varying strike-price levels and can give you either downside protection or upside exposure at a fraction of the underlying price.”
CME has no plans for physically settled Bitcoin contracts
On Oct. 1, McCourt stated that CME has no current plans to launch physically settled Bitcoin contracts. Its current Bitcoin futures contracts are settled in cash and McCourt added that “the number one demand from customers has been for options on our futures” since the launch of its futures product.