The amount of money locked in bitcoin futures at the global derivatives giant Chicago Mercantile Exchange (CME) rose to record levels on Friday as the US Securities and Exchange Commission (SEC) gave the green light to exchange-traded funds ( ETF) of futures linked to cryptocurrency. The record of open contracts at the CME represents an increase in institutional participation.
The dollar value of open interest (OI) contracts, or the number of futures contracts traded but not settled with a netting position, was US$ 3.64 billion on Friday, more than double in the month, according to data from bybt.
The previous $3.26 billion high was recorded during the bull market frenzy in February.
Glassnode data shows that the total number of outstanding contracts at CME increased by 60% to 56,410. The spread between the previous month's CME-based futures contract, also known as the premium or basis, and the spot price has risen from 1% annualized to more than 16% this month, along with bitcoin rising 40% to US$ 62,000.
Activity at the CME increased amid rising expectations that several futures-based ETFs could begin trading in the US in the coming weeks, as well as stronger participation from state institutional investors.
“Speculation about an imminent ETF future really soared last week as the SEC was unusually quiet ahead of the Oct. 18 approval deadline for the first of the ETFs,” said Martha Reyes, head of research at the brokerage and digital asset exchange. Bequant .
“We institutions have been driving the rally, as evidenced by activity at the CME and the inversion of the base at the CME in relation to retail exchanges,” added Reyes.
Activity on the other exchanges also increased, albeit at a slower rate, as evidenced by the CME's jump to number two on the list of largest open interest bitcoin futures exchanges.
The exchange was the fourth largest last month. Total open futures (OI) worldwide also rose to more than $23 billion for the first time in five months.
“The BTC futures OI has reached levels not seen since May, highlighting the rising expectations of the US listing of BTC futures ETFs,” said Noelle Acheson, head of market insights at Genesis Global Trading. "One difference between now and then is the higher weight (11% vs 17%) of futures with cash margin, implying lower overall leverage in the market."
The upcoming futures-based ETFs from ProShares, Invesco, Valkyrie and others will invest in regulated bitcoin futures contracts, such as those traded on the CME, rather than buying the real cryptocurrency.
While the approval of futures-based ETFs is widely hailed as an open door to more conventional money, some observers are still skeptical:
“Demand for these future bitcoin ETFs is likely to be disappointing. This could be of interest to a limited audience of institutions that cannot hold cash or derivatives directly, as well as retail investors who prefer the familiarity and convenience of ETFs,” said Acheson.
“Most investors, however, tend to continue accessing BTC exposure through cash products or derivatives, or through any of the many listed securities or international funds that offer BTC cash exposure,” added Acheson .
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The Chicago Exchange content records record interest in BTC futures before the ETF's debut first appeared on Cointimes .