Bitcoin futures contracts are an intriguing product in the financial sector. Despite a lackluster initial response, things are improving gradually. CME is now the official market leader, clearly pulling ahead of CBOE. More importantly, it is well ahead of Coinbase’s spot Bitcoin trading.
The Bitcoin Futures Race Is On
Providing Bitcoin futures contracts to mainstream speculators is a challenge. No official guidelines exist for this type of product. Despite the lack of regulation, both CME and CBOE jumped on this opportunity many months ago. It appears one of these companies is clearly more popular compared to the other. CME is surging, whereas CBOE is still overcoming the initial dip of June 2018.
July has been a positive month for CME Group in this regard. Its Bitcoin futures volume doubled in that month alone. This is despite Bitcoin dropping in value once again. The volatility of Bitcoin is not deterring investors and speculators as of yet. Futures volumes continue to increase throughout August, which is a promising sign.
For CBOE, the story is very different. Despite launching its Bitcoin futures ahead of CME, the company is struggling for traction. Investors seem to be primarily interested in CME Group’s offering, and the discrepancy between the two is only growing larger. Last month, CME futures volume surpassed 30,000, whereas CBOE barely passed 6,000. The Chicago-based exchange operator will need to step up its game to remain relevant.
Overtaking Coinbase Spot Trading
Perhaps the biggest surprise is how CME relates to Coinbase. Until April 2018, spot Bitcoin trading volume easily topped Bitcoin futures trading. That situation has now come to change in spectacular fashion. The volume generated by CME continues to trump Coinbase spot trading by a large margin. This trend became apparent in April and has not relented ever since.
This competition between different venues of Bitcoin “exposure” will be rather interesting. CBOE has already taken steps to improve its market position. Quintupling the number of contracts one trader can hold is an important first step. Catching up to the market leader will take a lot of time and effort. This change alone may not be sufficient to make any real changes happen.
For Coinbase, this is welcome competition. The largest US-based exchange still welcomes new users on a daily basis. At the same time, they are not directly competing with Bitcoin futures either. Even so, the dominant position by CME shows consumers are looking for different ways to gain exposure to Bitcoin. Spot trading may no longer be the most popular option in this regard.
Are you surprised by the dominance by CME in Bitcoin futures contracts? Let us know in the comments below.
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