CME Group Q3 Report: Bitcoin futures grew 61% year-on-year despite the market volatility

The Chicago Mercantile Exchange (CME) Group recently tweeted that despite the fall in bitcoin (BTC) prices, customer interest in CME bitcoin futures remained strong in the third quarter of 2019.

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CME Bitcoin futures rose 61% from the third quarter of 2018

On October 9, CME Group stated on Twitter that its interest in CME Bitcoin futures remained strong in the third quarter of 2019, with daily open contracts (OI) exceeding 4,600 contracts, up from the third quarter of 2018. 61% due to a strong interest in institutional investors.

Open interest refers to the total number of outstanding derivatives contracts that have not yet been settled, rising from 2,873 in the third quarter of 2018 to 4,629 contracts. CME pointed out that although bitcoin prices have fallen by nearly 25%, this increase in numbers still occurs.

According to previous reports, CME Group will increase the option trading for its bitcoin futures contract in the first quarter of 2020, pending review by the regulatory authorities. Tim McCourt, head of global equity index and alternative investment products at CME Group, said at the time:

“Based on the growth of customer demand and the strong growth of our bitcoin futures market, we believe that the launch of the options product will provide our customers with greater flexibility to trade and hedge their bitcoin price risk.”

McCourt said that bitcoin futures transactions had increased, setting a record in May and trading 34,000 futures contracts worth $1.3 billion, equivalent to 170,000 BTCs. At the same time, the agency's interest in CBBC's bitcoin futures peaked in the early summer of 2019, and in July it reported a record 56 large open interest holders.

McCarte said in the SCMP report that he hopes that futures trading volume will also come from miners seeking more precise risk exposure, not just traders, adding:

“Although futures provide you with one-to-one exposure […], options offer you different levels of exercise prices and can provide you with price downside protection or upside risk at a fraction of the base price.”

CME Group has no plans to provide physical settlement of bitcoin contracts

On October 1, McCarter said that CME has no plans to initiate a physical settlement of Bitcoin contracts. Its current bitcoin futures contract is settled in cash, and McCourt added that since the introduction of Bitcoin futures products, "the customer's number one demand has been to add option services to our futures products."