Bitcoin futures: Ten months after launch, the flight is weak
Since its launch in December 2018 bitcoin futures contrary to expectations, has not caused the market to recover.
There are two exchanges trading in bitcoin futures is the CME and Cboe. In the third quarter on both exchanges together accounted for 9,000 contracts on the day, and it is very small compared to the market traditional futures.
Overall, the activity at CME is growing. However, investors expected that the launch of the contracts is accompanied by huge trading volumes. Michael Unetich, Vice— President, cryptocurrency Trading Technologies International, explains:
The market was just not ready to make it happen.
Preparing to launch bitcoin futures spurred the growth of the cryptocurrency market in the last year. Many believed that CME and Cboe will buy bitcoins to Fund their futures contracts. It was also assumed that after the launch of a new tool of wall street will pump up the price using futures. But the reality was far from expectations: bitcoin peaked in the same week when they were launched futures and then began to decline. A record high of $19 870 was marked on 16 December 2018, between the launch on the Cboe (December 11) and on CME (December 18).
On wall street recognize that futures contracts for bitcoin has not met expectations. Professor of Finance, University of Houston Craig Pirrong says:
It’s not something that can be called “roaring” success. Institutional players have stayed away from bitcoin; futures contracts, as such, probably will not generate significant volumes.
Many wonder why the big players are not interested in the tool. There is an opinion that they are scared of risks and too much unjustified hype surrounding the cryptocurrency.
Chris Concannon, chief operating officer of Cboe, said:
It was more talk than trading volume. Shocked me the attention that gets the market, given its size. The whole stock market is a fifth of the Apple.
Except that bitcoins themselves are risky, futures contracts are expensive. While the flagship futures CME S&P 500 at a four-percent require initial margin, for bitcoin futures this figure is 40%. This means that investors need ten times more capital to enter the market. In spite of this, professionals believe that bitcoin futures are the future.
Brad Koppen, head of cryptotrading company CMT Digital, compares this tool with VIX futures, which allow you to earn on market volatility:
VIX is gaining strength over the years, but now it is very successful product Cboe; around it is built a lot of ETF and there is a whole class of assets. Futures on bitcoin will take its place. Many have forgotten just how much time is needed for this VIX.