Towards the end of last year, CME Group, the operator of the world’s largest futures exchange, launched its Bitcoin futures product. Unlike the year so far, last year told a different story for cryptocurrencies and the market absolutely surged in value. Tim McCourt, the managing director and global head of equity products and alternative investments, spoke how their Bitcoin futures product had actually become incredibly popular, saying;
“It [trading volume] is steadily increasing each month.”
According to figures issued by the company, back in December, the average daily trading volume was about 1,600 contracts, but in just three months, this number had increased dramatically to 2,500 contacts.
30% of this volume was from outside the US, namely Asia. When you consider that back in February, over 400 futures contacts were traded each day during Asian trading hours, this is really no big surprise.
A Bitcoin futures contract from CME is equivalent to 5 Bitcoin; more than its rival, Cboe, where their futures contracts represents just one Bitcoin.
There tend to be three different types of investors in the crypto market. These are typically; hedgers who have inventories of Bitcoin, speculators who want to gain from playing short-term price swings, and finally, hedge fund and asset managers who want exposure to the new asset class and allocate to alternative investments. On top of this, it has been reported that there has been an increase in interest from institutional investors.
McCourt believes that an increase in regulations will actually be a good thing, and will encourage more mainstream investors to enter into the market. He said;
“More regulation will increase efficiency of the market and give investors confidence.”
The main priority for the group is to build a better system where investors can trade Bitcoin products much more efficiently.