CBOE Bitcoin Futures Trading One of Most Successful Products Just Six Months After Launch

Bitcoin Futures Underwhelm

In December 2017, Bitcoin futures launched. This was right before the peak of last year’s price bubble. By October 2017, many believe that the update has been somewhat disappointing. Even though bitcoin experienced quarterly gains in volume, there has been no significant growth of daily contracts that users had expected.

The big question that arises is “what went wrong?” There seemed to have been a great deal of buzz before the futures launched in December and bitcoin enthusiasts saw it as a step toward mainstream adoption. Further, in August 2017, the Chicago Board Options Exchange announced its plans, which led to a 600 percent surge in BTC price.

However, on December 10, 2017, trading commenced and a week later, the Chicago Mercantile Exchange traded its own version. Accordingly, bitcoin mania was big and prices and media-interested was strong as well. Despite some initial strength, trading has not been as successful as some had hoped.

Some believe that the market was not ready. According to Michael Unetich, the VP of Chicago’s Trading Technology International, “the market just wasn’t ready for that to happen.”

Even though CM reported that trading was up at 41 percent in Q2 and Q3 of 2018, these figures amount to 5000 contracts per day. This is quite a low figure when compared to the 18 million contracts that take place for oil, gold, and interest rates.

Craig Pirrong of the University of Houston explained,

“Institutional players have stayed on the Bitcoin sidelines, and as long as they are, the futures contracts are likely not to generate substantial amounts of volume.”

Ultimately though, it is a waste to consider the bitcoin futures launch as a fail. Bitcoin futures has received a great deal of press. According to CBOE,

“More articles than volume.” Further, many products are “killed off with little fanfare.” Moreover, futures are “Probably considered statistically one of the more successful products, both out of the gate and with the growth in the first six months.”

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