Open Interest on CME Bitcoin Futures Drops to 6 Months Low But Bakkt’s Flying
Bitcoin is currently trading at $7,448 on spot exchanges as per Coincodex while managing the daily trading volume of $269 million on ten exchanges with real volume, up from $140 million earlier in the day and $120 from the weekend.
Unlike the low volume on spot exchanges, Bitcoin futures have been recording more than a billion on each platform.
When it comes to CME Group, BTC is trading at $7,470 as per Barchart.com. As for trading volume, on Dec. 6 it reported $133 million, down from $331 million on Dec.4, and $426 million at the end of November, as per the data analytics platform Skew.
Open interest on the CME BTC futures meanwhile dropped to over a six months low last week.
In June when BTC price went to its 2019 high at about $13,900, CME had two consecutive $1.5 billion sessions where the total open interest reached about 35% of popular derivatives platform BitMEX that offers 100x leverage. Skew states,
“Remember max leverage on CME is ~2.5x so this is probably more collateral committed to trade than on most (all?) of the retail off-shore derivatives platforms.”
Open Interest on the CME BTC Futures reached a 6mths+ low last week. Traders shutting down books for the end of the year? pic.twitter.com/ocGRYOk0cm
— skew (@skewdotcom) December 9, 2019
ICE’s Bakkt meanwhile is consistently growing. On Nov. 27, it made a new all-time high at 5671 BTC. Last week, however, total volume was down 34% from the week prior at $82 million. Skew states,
“The physical settlement of the contracts – with the introduction of the Bitcoin Bakkt warehouse – makes it more complex / longer for market participants such as clearing members to integrate.”
Open interest however on Microsoft and Starbucks backed Bakkt is surging, increasing by 52% from the week before at $6.5 million.
Today, Bakkt launched the first CFTC regulated option on the futures contracts for Bitcoin that will attract a new set of market participants interested to trade the volatility. CME is also preparing to launch options on Bitcoin futures on January 13.
As per the official announcement, the options contract is based on the Bakkt Bitcoin monthly futures contract and settles the underlying futures contract two days before the expiry.
The platform also launched new cash-settled futures contracts that are available on ICE Futures Singapore. It is different from the September launched Bitcoin futures in the way that while these are physically delivered contracts, the latest one is cash-settled.
However, as we reported, the physically settled Bitcoin futures of Bakkt, that differentiates itself from CME and other platforms’ contracts aren’t exactly completely backed by Bitcoin either.
For starters, 37% of Bakkt futures are “backed by dollars or treasuries.” Also, as economist and trader Alex Kruger explained, “almost nobody takes physical delivery.” Though this isn’t a problem and is normal in future deliveries, and Bakkt is still very much bullish for Bitcoin, it is “no panacea.”