Back in December 2017, at the peak of the crypto all-time high markets, the Chicago Board Options Exchange (CBOE) and the Chicago Mercantile Exchange (CME) both launched Bitcoin futures. Bitcoin skeptics had slammed the move as futile, but trade volume outstripped all expectations and soared beyond belief. While these future contracts have been indicated as a possible cause for the crypto winter following a large volume of short contracts, crypto markets appear to be finally recovering.
Now the crypto markets are beginning to recover, Bitcoin futures on the CME are starting to pick up pace and trade volumes have reached high a new all-time high. 18,338 Bitcoin futures contracts have been traded in February, which is equal to 91,690 BTC or around $360 million. Whether this is a good thing or not for the crypto world is yet to be seen, but it does highlight the fact that investors are betting on Bitcoin, and they are betting big.
What are Bitcoin Futures?
Bitcoin futures are contracts traders place with a provider to buy or sell Bitcoin at a price in the future. These contracts have an expiry date, and when the deadline hits – also known as the delivery date – the trader must fulfill their end of the contract, no matter the price. Traders can use this to bet big on a Bitcoin rally or short and hope for a price crash in order to make money without actually holding Bitcoin themselves. They are particularly popular amongst institutional investors, as most trade with large amounts of leverage.
What is the Data Predicting for 2019?
We have access to reams of data about which way investors are placing their bets with these Bitcoin futures, and we know you’re dying to know what’s happening. Bitcoin bulls get ready, the current total marginal longs are at 27.057k, while marginal shorts are at 18.082k. This means 59.85% of all open future contracts are holding bullish positions, while 40.16% are hoping for an extended crypto winter. This data means that institutional investors are betting big on a Bitcoin price rally – something we have been seeing over the weekend.
No Altcoin Futures for CME
Bitcoin futures have proven incredibly popular amongst investors, sparking the question of altcoin futures. Terry Duffy – CME CEO – has come out and said that for the time being, there are no plans for altcoin futures on the cards. Launching Bitcoin futures was one of the most controversial things CME has ever done. Altcoins are far more volatile, and CME wants more time to fully understand and develop a strategy for Bitcoin futures before delving into the world of altcoins – a move that makes a lot of sense.
Future contracts indicate that this brief upturn in the crypto markets could be here to stay – something that will be music to the ears of holders around the globe. While this data is no indication of whether Bitcoin will in fact end the year higher than it is now, it’s a sign that investors are feeling the bulls emerging. Hold on, one more year for #lambo2020!