Bitcoin Futures

Bitcoin futures open interest on CME nears 2021 all-time high

The futures positioning on CME shows Bitcoin could still move higher from its current price, says IG Australia analyst Tony Sycamore.

Bitcoin (BTC) futures open interest has reached $5.2 billion on the global derivatives giant Chicago Mercantile Exchange (CME), $200 million shy of its late October 2021 all-time high.

Open interest in CME’s Bitcoin futures has grown from $3.63 billion to $5.20 billion over the last 30 days, to Coinglass data. The open interest surge has run parallel to Bitcoin’s 26% gain over the same time, with Bitcoin currently trading at just over $44,000.

From Oct. 1–21, 2021, open interest in CME’s Bitcoin futures surged from $1.46 billion to $5.45 billion.

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London Stock Exchange Group may provide clearing services for BTC derivatives in Q4

LCH SA will team up with the FCA-regulated GFO-X trading venue to create a centrally cleared, regulated trading environment.

The United Kingdom could see its first centrally cleared trading venue for digital asset derivatives due to a partnership between a London Stock Exchange Group (LSEG) business and trading startup Global Futures and Options (GFO-X). They intend to launch the service in the fourth quarter of this year.

According to an April 11 announcement, LCH SA, the Paris-based subsidiary of the LSEG clearinghouse, is set to provide clearing services for dollar-denominated, cash-settled Bitcoin (BTC) index futures and options contracts traded on the GFO-X venue. The plan still requires regulatory approval.

GFO-X is regulated by the United Kingdom’s Financial Conduct Authority to operate a multilateral trading facility. GFO-X co-founder and CEO Arnab Sen described the company as “the UK’s first regulated and centrally cleared trading venue focused entirely on digital asset futures and options.”

Related: The creator of the FTSE100 launches indices for crypto

LCH SA has created a new, segregated clearing service called LCH DigitalAssetClear. Frank Soussan,  head of LCH DigitalAssetClear, said:

“Bitcoin index futures and options are a rapidly growing asset class, with increasing interest among institutional market participants looking for access within a regulated environment they are familiar with.”

Traditional financial institutions and other major corporations are increasingly moving into digital assets. In January, Samsung launched a Bitcoin exchange-traded fund on the Hong Kong Stock Exchange. The Tel Aviv Stock Exchange is seeking to expand its crypto trading. Meanwhile, a Boerse Stuttgart Digital subsidiary recently received approval from German regulators to offer crypto custody service. Nasdaq is expected to launch a crypto custody service in the first half of this year.

Magazine: Pro-XRP lawyer John Deaton ‘10x more into BTC, 4x more into ETH’: Hall of Flame

Argentina securities regulator approves Bitcoin futures index

The regulated Bitcoin futures index is reportedly a first in Latin America and is set to debut in May.

The securities regulator of Argentina has approved a Bitcoin-based futures index set to debut on the Matba Rofex exchange. The Bitcoin (BTC) futures contract will start trading in May, with the exchange claiming it would be the first regulated Bitcoin futures index in Latin America.

The National Commission of Value (CNV), the country’s securities regulator, approved the Bitcoin futures index as part of a strategic innovation agenda. The innovation agenda, which launched in the first quarter of 2022, is focused on creating a space for public-private collaboration to develop new and creative products in the capital market.

The Bitcoin futures contract will be based on the price of BTC provided by various entities in the nation offering BTC/ARS trading pairs. All trades will be settled in the national fiat currency, with traders required to deposit Argentine pesos through bank transfer.

For the provision and use of payment services in the nation, an exchange providing these contracts must ensure it has a valid contract with a payment services provider registered with the Central Bank of the Argentine Republic.

The regulated Bitcoin futures index would offer qualified investors a safe way to gain BTC exposure in a transparent and regulated environment. At the same time, the CNV has also asked the Matba Rofex exchange to incorporate alerts that warn investors of the risks associated with such financial instruments.

Related: Coinbase CEO urges Bitcoin legal tender for Brazil, Argentina — Reaction

Argentina is struggling with high inflation, and many citizens have turned to Bitcoin to mitigate the effects. The country’s peer-to-peer Bitcoin trading volume has also hit new highs amid soaring inflation.

P2P Bitcoin trading volume. Source: CoinDance

A recent bill proposed by the Ministry of Economy encouraged citizens to declare their crypto holdings and incentivized them with tax benefits. Over the years, the South American nation has taken a pro-crypto stance, with crypto adoption nearly double its neighboring countries.

Crypto penetration in Argentina. Source: Canva

The launch of the Bitcoin futures contract also comes just a week after Binance announced its expansion to Argentina. Binance CEO Changpeng Zhao shared the news of the latest approval.

Smaller investors can have outsized impact on crypto investment markets: BIS study

Researchers looking at the “crypto carry” rate between spot and futures markets and its causes came to conclusions about crypto market booms and busts and how they happen.

The Bank for International Settlements (BIS) has released a working paper examining “crypto carry” — the differences between Bitcoin (BTC) and Ether (ETH) spot and futures prices — and its effect on crypto investment markets. The complex paper sheds light on the behavior of crypto investors, particularly smaller investors, in relation to boom and bust cycles.

“Carry” describes the results of “going long in the spot market, while selling forward the same amount forward via a futures contract.” The paper bases its findings on “stylized facts” based on a variety of exchanges over time.

Very little of the carry size — about 3% — resulted from differences between interest rates on crypto and fiat or variations among exchanges, which may be crypto-native, like Binance and OKX, or regulated like the Chicago Mercantile Exchange (CME). The major factor was the convenience yield of holding futures:

“Crypto carry is large (up to 60% p.a.), strongly time-varying, and is most compatible with the existence of a highly volatile crypto futures convenience yield, i.e. investors are willing to pay more for the convenience of a levered futures contract relative to buying spot crypto.”

Rising crypto carry was found, based on the evidence of traders on the CME, to be associated with “a rise in net long positions by ‘nonreportable’ traders,” such as “family offices, proprietary trading shops that run commodity trend-following strategies, and/or wealthy individuals.”

Related: Institutions ‘extremely interested’ in crypto ETFs, but buying has cooled: Survey

Those buyers take levered futures positions “when there are strong price trends and heightened media attention.” Sellers experience risks from price volatility at the same time, the argument continued, making capital on the sell side “scarce and slow-moving.”

This situation has notable consequences, including causing a high carry rate. Furthermore, “The interplay between these forces […] elp[s] explain why severe price run-ups and market crashes are a frequent feature of crypto markets,” the authors wrote. Thus, the size of crypto carry can partly predict market crashes because of its correlation with convenience yield. In traditional markets, convenience yield describes the premium of holding an underlying asset rather than its derivative. The authors wrote:

“One of the most salient features of crypto markets over the past years, namely rapid price booms followed by large busts, seem to be linked to the drivers of the crypto convenience yields.”

Magazine: ‘Deflation’ is a dumb way to approach tokenomics… and other sacred cows

Betting on turmoil: Deribit launches Bitcoin volatility futures

Volatility products are popular with traditional investors, as they enable portfolio hedging, risk management and speculation.

Crypto derivatives exchange Deribit will soon launch Bitcoin (BTC) volatility futures, giving investors a direct way to measure and trade BTC market volatility. 

On March 17, Deribit introduced BTC DVOL futures — a derivatives contract built on the Deribit Bitcoin Volatility Index, which measures the implied volatility of the largest cryptocurrency. Deribit’s volatility gauge provides a 30-day outlook on investors’ expectations for annualized volatility.

Like other volatility products, BTC DVOL can potentially help traders with risk management, portfolio hedging or market speculation.

Volatility-as-an-asset is widely traded in traditional finance, with the most popular product being the Chicago Board Options Exchange Volatility Index, also known as VIX. The VIX fluctuates on a scale of 1–100, with 20 representing the historical average. Readings below 20 signal lower implied volatility than the historical mean. Readings above 20 are usually associated with more turbulent financial conditions, while anything above 30 signals significant market volatility, usually due to uncertainty, risk or investor fear.

VIX measures the volatility of S&P 500 index options, a leading indicator of the U.S. stock market.

Traditional markets have battled extreme volatility over the past 12 months, marked by major fluctuations in the S&P 500 index and broader stock market. Source: Yahoo Finance

Bitcoin and the broader crypto markets have exhibited extreme volatility over the past 12 months. The period known as crypto winter is usually associated with deep corrections in digital asset prices following an over-extended bullish phase.

Related: Crypto acted as safe haven amid SVB and Signature bank run: Cathie Wood

Although crypto investment products experienced record outflows last week following the collapse of Silicon Valley Bank and Signature Bank, regulatory clarity on investor deposits has helped Bitcoin stage a large relief rally. Bitcoin’s price crossed $27,000 on March 17 for the first time in over nine months.

Bitcoin surges past $24,000 on CME launch of BTC event contracts

Bitcoin futures on CME have traded 550,000 contracts since inception.

On March 13, American derivatives marketplace CME announced the launch of Bitcoin (BTC) futures event contracts. The exchange, which is fully regulated and has cleared administrative review, will henceforth facilitate cash-settled, daily expiring contracts tied to Bitcoin futures with a “lower-cost way for investors to trade their views on the up or down price moves of Bitcoin.” Tim McCourt, global head of equity and FX products at CME Group, commented:

“Our new event contracts on Bitcoin futures provide a limited-risk, highly transparent way for a wide range of investors to access the Bitcoin market via a fully regulated exchange. These cash-settled, daily expiring contracts will further complement our existing suite  which have traded more than 550,000 contracts to-date.”

On March 10, Cointelegraph reported that asset manager VanEck’s spot Bitcoin trust application was denied by the U.S. Securities and Exchange Commission (SEC). The commissioners noted that the SEC had denied every application for a spot Bitcoin trust that has been filed, amounting to almost 20 over the last six years.

Days prior, digital currency management firm Grayscale published a transcript related to its ongoing lawsuit with the SEC over the denial of its Grayscale Bitcoin Trust (GBTC) to be converted into an exchange-traded fund. According to the transcript, Judge Neomi Rao commented:

“Because it seems to me that these things, one is just essentially a derivative of the other. They move together 99.9% of the time. So, where’s the gap in the Commission’s view?”

Currently, GBTC is trading at a discount of 38.19% to net asset value, up from a historic low of 50%. The firm’s litigation with the SEC is ongoing.

Samsung investment arm to launch Bitcoin Futures ETF amid rising crypto interest

Hong Kong investors can now gain exposure to Bitcoin through Samsung’s new ETF listing, launching on Jan. 13.

In Hong Kong, the bell rings for Bitcoin (BTC). Samsung Asset Management Hong Kong (SAMHK), a subsidiary of Samsung’s investment arm Samsung Asset Management, is set to list the “Samsung Bitcoin Futures Active ETF” on the Hong Kong stock market on Jan. 13.

The move comes amid a surge in interest from both the government and institutional investors in the region.

The Hong Kong Stock Exchange. Source: thetradenews.com

The ETF, or exchange-traded fund, will track the spot price of Bitcoin by investing in Bitcoin futures products listed on the Chicago Mercantile Exchange (CME). The ETF will primarily invest in the CME Bitcoin Futures, with some investments in the CME Micro-Bitcoin Futures.

Currently, Hong Kong is the only market in Asia where Bitcoin futures ETFs can be traded. The Samsung Bitcoin Futures ETF joins the Hong Kong Crypto Futures ETF, which began trading to the tune of $70 million in 2022. Other markets worldwide include Canada, the U.S., Australia, and some European countries such as Switzerland.

Cast your vote now!

Park Seong-jin, head of Samsung Asset Management Hong Kong, commented:

“Hong Kong is the only market in Asia where Bitcoin futures ETFs are listed and traded in the institutional market. It will be a new option for investors who are interested in Bitcoin as a competitive product that reflects their experience in risk management.”

This ETF listing will provide retail and institutional investors with a new way to gain exposure to Bitcoin, which may help to attract more mainstream investors to the cryptocurrency space. With Samsung’s reputation and brand power, the ETF could be an attractive option for investors who are looking for a way to invest in Bitcoin without buying and holding their own private keys directly.

The move by Samsung comes as the price of Bitcoin surpassed the $18,000 level, indicating a potential rise in positive sentiment among traders. Other cryptocurrencies have also followed suit, recording a recovery in the broader crypto market.

Related: Bitcoin mining ETF tops equity ETF market in new year’s performance charts

In 2022, Samsung Asset Management Hong Kong Limited held $1.4 bn assets under management, while the globally recognized brand of Samsung continues to be actively involved in the crypto space. The South Korean company, valued at over $300 billion, boasts a blockchain wallet while the flagship smartphone, Galaxy S22 comes with a preinstalled crypto.

The ETF is a further indication that the global brand is looking to capitalize on the growing interest in cryptocurrencies.

CME Group launches euro-denominated Bitcoin and Ether futures

First announced on Aug. 4, the euro-denominated Ether futures represent investment vehicles launched prior to the blockchain’s transition to proof-of-stake.

Derivatives marketplace Chicago Mercantile Exchange Group has launched trading for Bitcoin euro and Ether euro futures contracts.

In a Monday announcement, CME Group said that it launched contracts for euro-denominated Bitcoin (BTC) and Ether (ETH) futures sized at 5 BTC and 50 ETH per contract. Both contracts will be listed on CME, cash-settled and based on the CME CF Bitcoin-Euro Reference Rate and CME CF Ether-Euro Reference Rate, respectively.

“Our new Bitcoin Euro and Ether Euro futures will provide institutional clients, both within and outside the U.S., with more precise and regulated tools to trade and hedge exposure to the two largest cryptocurrencies by market cap,” said CME Group global head of equity and FX products Tim McCourt.

First announced on Aug. 4, the euro-denominated ETH futures represent investment vehicles launched prior to the Merge in which the Ethereum blockchain transitions to proof-of-stake — expected between Sept. 10 an20. Cointelegraph reported that countries in Europe, the Middle East and Africa represented 28% of all trading for BTC and ETH futures contracts.

Related: CME Group plans to launch options on ETH futures prior to the Merge

CME Group launched its first BTC futures contract in December 2017, followed by an ETH futures contract in February 2021. In 2022, the derivatives exchange expanded its offering of crypto investment vehicles to include micro BTC and ETH futures. The launch of euro-denominated BTC and ETH futures came as the euro remained at parity with the U.S. dollar — at the time of publication, 1 euro is worth roughly $1.

According to data from Cointelegraph Markets Pro, the price of ETH is $1,509 at the time of publication, having risen more than 3% in the last 24 hours. The BTC price fell below $20,000 on Sunday, hitting a 20-month low, but since rose 2% to reach $20,342.

CME Bitcoin futures see record discount amid ‘very bearish sentiment’

Derivatives traders have become noticeably more conservative this month compared to last, new data shows.

Bitcoin (BTC) futures are starting to see record discounts as sentiment among derivatives traders worsens. 

In its latest dedicated report issued Aug. 23, analysis firm Arcane Research painted a worrying picture of the morale among BTC futures participants.

Futures basis revisits June lows

After an initial shock during June’s BTC price drop, which has since held as a macro bottom, Bitcoin derivatives have not been the same.

After an initial bounce, metrics are trending downwards, and this month are challenging records.

Futures basis — the difference between futures contract prices and the Bitcoin spot price — is already back at lows seen only during June’s dip to $17,600. The move came thanks to last week’s sudden sell-off on BTC/USD, which resulted in multiple visits below the $21,000 mark.

“Overall, the current futures basis sits at levels only experienced briefly during the June crash,” Arcane confirmed, adding that the data is “indicative of a very bearish sentiment among futures traders.”

More discouraging figures come from CME Group’s front-month futures contract price.

Beating out prior lows from July 2021, those contracts now trade at their biggest-ever discount to spot price.

“Overall, CME’s futures have tended to trade at a discount in the last two months but saw a solid short-lived recovery during the early August strength in the market,” the report continued.

CME Bitcoin futures annualized 1-month rolling basis chart (screenshot). Source: Arcane Research

Arcane argued that “structural effects” within the derivatives market could go some way to explaining the behavior, but that “worsening liquidity or general de-risking” were both still a risk.

“While BTC derivatives might signal a climate ripe for a short squeeze, the choppy trading range alongside global market turmoil speaks in favor of conservative positioning and gradual accumulation in the spot market,” it concluded.

GBTC lingers near record lows

After United States regulators rejected its application for a Bitcoin spot price exchange-traded fund (ETF) in June, meanwhile, the largest institutional Bitcoin investment vehicle continues to struggle.

Related: Aussie asset manager to offer crypto ETF using unique license variation

The Grayscale Bitcoin Trust (GBTC) is still trading at more than a 30% discount to the Bitcoin spot price.

The latest data, which Cointelegraph previously reported, put the GBTC discount — once a premium — at 32.5%. The discount also saw records in June, when it briefly passed 34%.

For investor and researcher Jeroen Blokland, signs of a trend change remain elusive.

“I expect that “physical” Bitcoin ETFs will get approved at some point. After the recent SEC ruling, that doesn’t seem imminent, but futures ETFs (also) have their menaces,” he argued this week.

Blokland said that institutional investors were “massively” choosing BTC exposure options other than GBTC.

GBTC premium vs. asset holdings vs. BTC/USD chart. Source: Coinglass

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

CME Group plans to launch euro-denominated Bitcoin and Ether futures

The futures options, expected to start trading on Aug. 29, followed the CME Group launching micro-sized Bitcoin and Ether options in March.

Major derivatives marketplace Chicago Mercantile Exchange Group aims to launch trading for Bitcoin euro and Ether euro futures contracts starting on Aug. 29.

In a Thursday announcement, CME Group said that subject to regulatory review, it plans to launch contracts for euro-denominated Bitcoin (BTC) and Ether (ETH) futures that will be sized at 5 BTC and 50 ETH per contract. Both contracts will be listed on CME, cash-settled, and based on the CME CF Bitcoin-Euro Reference Rate and CME CF Ether-Euro Reference Rate.

“Ongoing uncertainty in cryptocurrency markets, along with the robust growth and deep liquidity of our existing Bitcoin and Ether futures, is creating increased demand for risk management solutions by institutional investors outside the U.S.,” said CME Group global head of equity and FX products Tim McCourt. “Euro-denominated cryptocurrencies are the second highest traded fiat behind the U.S. dollar.”

According to McCourt, countries in Europe, the Middle East and Africa represented 28% of all trading for BTC and ETH futures contracts. The listing announcement also followed the euro reaching parity with the U.S. dollar in July for the first time in 20 years — at the time of publication, 1 euro is worth roughly $1.02.

Related: Circle launches euro-backed stablecoin EUROC

CME Group launched the first BTC futures contract — denominated in U.S. dollars — in December 2017, followed by an ETH futures contract in February 2021. In March, the derivatives exchange expanded its offering of crypto investment vehicles to include micro BTC and ETH futures.

Cointelegraph reported in July that CME Group’s BTC and ETH derivatives contracts saw record activity in the second quarter of 2022, with 10,700 and 6,100 contracts traded, respectively. The exchange also reported its micro BTC and ETH products had an average daily volume of 17,400 and 21,300 contracts, respectively, in Q2 2022. Much of the trading activity came amid extreme volatility in the crypto market, with the prices of both BTC and ETH dropping in May and June.