The introduction of Bitcoin futures was heralded as a major victory. Even without official regulation, numerous providers offer this type of exposure. Several months down the line, it seems the interest in these products isn’t increasing by much. One has to wonder if this investment vehicle is simply ahead of its time.
The Lack of Demand is Worrisome
Launching Bitcoin investment vehicles usually attracts a fair bit of attention. Institutional traders have shown a keen interest in cryptocurrencies as of late. For companies such as CME and CBOE, a golden opportunity arose in December of 2018. Both companies decided to issue Bitcoin futures contracts despite the lack of official regulation. That move, while still significant, is still not the success it should be.
Several factors contribute to the lack of interest in these investment vehicles. The year 2018 has been rather terrible for Bitcoin and other cryptocurrencies. An ongoing price decline has made people averse of Bitcoin until things improve With no changes in sight, the Bitcoin futures contract fail to generate a genuine buzz as well.
Most experts are not too surprised by this turn of events. It seems the lack of interest is synonymous with this extended bear market. This also confirms Bitcoin futures will not elevate the world’s leading cryptocurrency to a new all-time high at this stage. An unfortunate development, although not all hope is lost either. There is always a chance things will change virtually overnight.
The Future of Bitcoin Futures
To date, neither CME nor CBOE wants to abandon their Bitcoin venture just yet. That is only to be expected, at the launch took place less than a year ago. One thing both companies can improve upon is bringing down the overall costs. It is very expensive to use this particular way of gaining exposure to Bitcoin. Regular trading is a lot cheaper and also relatively accessible.
Additionally, it seems both companies will need to begin catering to the right users. Futures markets thrive when large institutions get involved. For Bitcoin futures, that is not happening as of yet. This is, according to experts, linked to the lack of commercial use for the world’s leading cryptocurrency.
It is only normal new products struggle for volume at first. This has been the same for exchanges, brokers, P2P marketplaces, and OTC service providers. It is evident Bitcoin futures providers will go through similar struggles, at least for the time being. Growing pains are normal when a relatively new industry is slowly maturing.
Do you think flagging interest in Bitcoin futures good or bad for the industry? Let us know in the comments below.
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