This article comes fromAMBCrypto, Original Author: Aakash Athawasya
Odaily Translator |
This article comes from
, Original Author: Aakash Athawasya
Odaily Translator |
Although Bitcoin futures are about to expire, the future of Bitcoin can be expected.
Volatility concerns are already on the horizon as the cryptocurrency world heads toward the expiration of yet another Chicago Mercantile Exchange (CME) futures contract. At the end of each quarter, a set of XBT contracts offered by the Chicago-based exchange expires, which is believed to have a bearish effect on the spot market, leading to a drop in bitcoin prices. Currently, contracts launched on June 3 will expire on August 30. And, judging by past price action, the (Bitcoin) price tends to react very sensitively to contract expiration.
The regulated futures market, considered a hotbed of crypto for institutional investors, is starting to lose its luster. The entire institutional-grade (regulated) crypto market turned to the CME, as the second-in-command, the Chicago Board Options Exchange (CBOE), exited the bitcoin futures market in March, just before bitcoin began its surge. However, during this time, Bitcoin has not only reached five figures, but there have been some positive signs: investment giants have begun to dabble in the cryptocurrency space.
With Intercontinental Exchange's Bakkt platform stepping into the market next month (September 23) with the launch of bitcoin futures, and the final hearing on the bitcoin ETF application scheduled for October, At present, the scale of the institutional market is far larger than that of CME. Personal finance firms like Fidelity and TD Ameritrade are looking to launch their own elaborate bitcoin trading apps, while big banks like JP Morgan, Goldman Sachs (to be confirmed) are lining up As if planning to launch an internal settlement currency in its own treasury.
Experts have stepped in to explore the issue. Some predict a similarly modest decline in prices as trading volumes fail to pick up, while others point to this institutional diversification leading to lower volatility in CME Bitcoin futures going forward. Institutional investors "have looked elsewhere (for other investment opportunities) in August," said the analyst known as Skew, although "approximately 50% of open interest is 'expiring'" due to CME cash The settled bitcoin futures market has seen massive outflows and the market will remain firm.expressOpen Interest (OI) details all outstanding derivatives contracts for a particular asset, including outstanding options and futures contracts. Open interest in CME Bitcoin futures has fallen sharply from a high of more than $350 million in early July. The chart listed by Skew shows that open interest on August 24 was just over $220 million.
Coincidentally, at the time when Bitcoin fanatics put Bakkt, which has not yet been finalized, on the shelf, ICE announced in June that its Bitcoin futures would enter the testing phase in the next month, which then reignited the trend. a spark. More recently, Bakkt confirmed that it will launch its physically delivered Bitcoin futures on September 23, as open interest on the CME charts began to decrease. Volume on the CME has been declining since the end of July, with an average volume of 4,349 contracts July 26-Aug 29 (in terms of the number of contracts traded per day), the CME Group recentlyexpress, since the beginning of the year, the average daily contract volume on the CME is 7,237 contracts. As a result, volumes on the CME were down almost 40% in the mentioned period compared to the year's average.
It is worth noting that due to the sharp rise in the price of Bitcoin in early August, the CME data of 7,237 contracts traded per day is seriously flawed.
deviation
. On April 4, just a few days after Bitcoin’s daily price rose by 17%, CME contract daily volume increased by 95%, with more than 22,000 contracts traded. Before that, the CME was trading more than 15,000 contracts per day.
Similar moves in the spot market and the Bitcoin derivatives market tend to be remembered when XBT expires. Analyst Josh Olszewicz charted (currently) the price volatility of Bitcoin’s main futures product based on spot price fluctuations. He highlighted 13 instances where Bitcoin’s price action changed as the XBT contract expired.
According to the above chart, there were several price fluctuations due to the expiry of the CME futures contract (ie exiting the XBT market without selecting CBOE): September 27th, October 25th, November 29th, and December 27th. However, CME-induced volatility will drop now that Bakkt has launched a physically delivered bitcoin futures product.Mati Greenspan, senior market analyst at eToro, said that with bitcoin futures expiring, what was once seen as the main catalyst for bitcoin's record high of nearly $20,000 in December 2017 has now been downgraded to "nearly (or) No effect". In an interview with AMBCrypto, the analyst said that a key reason for the lack of impact on bitcoin spot prices is the "cash settlement" feature of the CME contract. Each contract represents 5 bitcoins, but only as an investment vehicle, not to actually buy or sell cryptocurrencies. Essentially, Wall Street is just betting on the price of Bitcoin without owning any of it, and ICE's "venture" will fix that.
Asked if institutional investors would switch to Bakkt, Greenspan responded in the affirmative: “Yes. It’s more likely. Long-term implications, though, are much more exciting than short-term speculation.”Physical delivery of Bitcoin may not be the perk that institutions are after.Although Bakkt has launched futures and custody solutions for the cryptocurrency industry, it is for this reason that some investors may shy away from the market due to the high overhead costs of physical delivery compared to pure cash settlement offered by CME .CoinGecko co-founder and CEO Bobby Ong told AMBCrypto, “。”
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