Second bitcoin futures debut could lure volume to wild market

NEW YORK: Bitcoin investors expect futures volumes to perk up after CME Group Inc, the world’s largest derivatives exchange operator, launched its own contract to wager on the cryptocurrency yesterday.

The second US bitcoin futures launch is seen as another step towards big institutional investors warming up to a volatile asset that had until recently been accessible only via largely unregulated markets.

Like the futures contract launched last week by rival Cboe Global Markets, CME’s will be cash settled. But it will be priced off an index of data from several cryptocurrency exchanges, instead of just one.

The January CME contract will trade on. Bitcoin has drawn attention for its eye-popping price gains, but it is also notoriously volatile. Bitcoin exchanges and digital currency wallets meanwhile have struggled with issues like outages, denial-of-service attacks and hacks.

Bitcoin hit another record high on Friday near US$18,000 on the Luxembourg-based BitStamp platform, and has soared roughly 1,700% so far this year.

Chicago-based Cboe’s bitcoin futures surged nearly 20% in their debut last Monday, and more than 4,000 contracts changed hands by the end of the 4.15pm EDT settlement.

But the trading volume in the one-month contract, which expires in January, fell to just around 1,500 contracts the next day. By Friday, volume had stabilised at roughly more than 1,000 contracts.

The decline in bitcoin futures volume had been expected, analysts said, given concerns about the cryptocurrency’s underlying volatility. – Reuters