The Chicago Board Options Exchange (Cboe) has put the brakes on its Bitcoin futures contracts, sixteen months after they became the first entity to offer them. In a now amended document on their March offering, Cboe announced the decision to halt Bitcoin trading and suggested it was considering its long-term position:
CFE is not adding a Cboe Bitcoin (USD) (“XBT”) futures contract trading in March 2019. CFE is assessing its approach with respect to how it plans to continue to offer digital asset derivatives for trading. While it considers its next steps, CFE does not currently intend to list additional XBT futures contracts for trading. Currently listed XP TE futures contracts remain available for trading.
Lack of Volume, Lack of Interest or Both?
Reasons for the hiatus weren’t slow in coming, with many speculating that the Cboe were losing out to the contracts offered by Chicago Mercantile Exchange (CME) in terms of volume, making Cboe’s offering financially untenable:
That’s cause Cboe bitcoin futures trading volumes have been getting crushed by CME. pic.twitter.com/4dpi9Tfuwg
— John Todaro (@JohnTodaro1) March 14, 2019
I think I’m one of the only humans that traded the CBOE $xbt bitcoin futures.
Sad to hear that, but I’m not surprised, the volume never picked up as the CME contract did.I’m pretty sure they will consider listing it again when we 30k it
— ฿it฿it (@BitBitCrypto) March 14, 2019
The reasons for the declining volume could be symptomatic of a decline in interest in Bitcoin since the 2017 bubble, with volatility decreasing as the months have gone on. Another posited reason is the anticipated launch of physically backed futures contracts from the likes of Bakkt, which might be of more interest to futures traders.
Good for Bitcoin Purists?
Bitcoin futures contracts were not wholly welcomed when they were announced in 2017, with many speculating that they would encourage price suppression. Indeed, Bitcoin hit its peak of $20k just days after the CME launched their futures contracts in December of that year, since when it has been on downward spiral. The potential departure from the scene of one set of futures has therefore garnered a positive reaction from some:
The reason COBE is giving is “Futures Declining volume” = Good for Bitcoin = bad for suppressors. We wait and watch. https://t.co/H2a8L1Jv17
— Bitcoin, Gold, Silver & Geopolitics (@Super_Crypto) March 15, 2019
ETF Impact
The impact on the Cboe/VanEck/SolidX Bitcoin ETF is unclear at this stage, but the fact that it was resubmitted only weeks after being withdrawn back in January, at which time the Cboe would clearly have known about any futures volume issues on their platform, it can be expected that they are still behind the ETF, and perhaps see it as a more viable route back into the Bitcoin market later in the year.
