CME Bitcoin futures trading volume plunges 89% in three days

Source: Shallot Blockchain

According to Skew data, on Friday (February 21), the daily volume of the Chicago Mercantile Exchange (CME) Bitcoin (BTC) futures fell to its lowest point this year, with $ 118 million in contracts changing hands that day.

The low point only occurred three days after CME's daily trading volume exceeded the historical record of $ 1 billion for the third time. On February 18, CME Bitcoin futures generated more than 23,000 contracts or $ 1.1 billion worth of transactions.

The daily trading volume of CME Group Bitcoin futures. Source: Skew

Although trading activity soared on February 18, the trading volume of CME Group's bitcoin futures dropped rapidly, with trading volume plummeting by nearly 55% on February 19. The trading volume on February 20 dropped by nearly 58%, and the daily trading volume fell from $ 499 million to $ 211 million.

On February 21, the CME Bitcoin transaction volume fell by about half for the fourth consecutive day, further shrinking by 44%. Overall, CME Group's Bitcoin transaction volume fell by 89% in half a week.

CME Bitcoin futures came into effect in December 2017, only three times in history with daily trading volume exceeding $ 1 billion. The strongest trading day for CME Bitcoin futures ever occurred on May 13, 2019, when BTC tested $ 8,000 for the first time in ten months and exchanged $ 1.3 billion worth of contracts on that day. Bitcoin trading volume exceeded US $ 1 billion for the second time on June 27, 2019. At that time, BTC rose US $ 1,500 to reach a high of nearly US $ 13,800 in 2019.

OKEx senior analyst William believes that the most significant reason for the sharp drop in CME Bitcoin futures trading volume is, of course, that the price of Bitcoin plunged on February 20, plunging 5.4%, which dampened investor enthusiasm. Not so much the CME's BTC trading volume has plummeted, it is better to say that its trading volume has returned to normal levels. Since the bitcoin price entered the upward channel in January this year, investor enthusiasm has been ignited, and bitcoin futures trading volume has also been rising. After mid-to-late February, Bitcoin's position fluctuated fiercely at $ 10,000, repeatedly plunging, the market's enthusiasm decreased, and the transaction volume gradually dropped.

Is this a bullish signal?

The Coindesk analysis article commented that this was a bullish signal. The article pointed out that open positions refer to the number of futures contracts that have not been honored in any official exchange, and the transaction volume is the number of contracts traded during a specified period.

"A decline in trading volume with an increase in open positions is generally considered to be a sign that investors are sticking to their positions. In this case, the market will generally continue the previous trend; in the six and a half weeks ending February 18, The price of the coin has risen by more than 50% from a low below $ 7,000 to $ 10,500.

Such a rally is said to be supported by open positions and increased trading volume. During the first six weeks of this year, the daily trading volume increased from $ 176 million to $ 1.1 billion, and open positions increased from $ 127 million to $ 338 million. "

Bakkt Bitcoin Futures Update

The activity of bitcoin futures listed on the Intercontinental Exchange's Bakkt platform has also recently cooled down, and in just 7 days, positions have fallen sharply from a record $ 19 million to $ 10 million on February 20.

In terms of trading volume, the daily trading volume (cash settlement and physical settlement) on February 21 dropped to US $ 18.6 million, the lowest level since January 24. Bakkt futures reached a record trading volume of $ 50.1 million on December 18.

This article references:

Cointelegraph

https://cointelegraph.com/news/crypto-derivatives-cme-volume-crashes-89-in-3-days-sec-to-rule-on-etf

Coindesk

https://www.coindesk.com/cme-bitcoin-futures-daily-trading-volume-hits-2020-low-thats-a-bullish-sign