Understanding CME’s Stance on Bitcoin
Recently, Tim McCourt, a prominent figure at the CME Group, made it clear that the organization has no immediate plans to venture into physically settled Bitcoin contracts. That’s right; they’re not diving headfirst into the crypto pool just yet. Speaking with MarketsMedia on October 1, he stressed that the development of new products hinges significantly on customer demand. In other words, they’re waiting for someone to order a large pizza before they break out the toppings!
The Rise of Bitcoin Futures
The CME has been in the Bitcoin game since December 2017, trading Bitcoin futures contracts that are currently settled in cash. McCourt indicated that despite the heightened excitement around cryptocurrencies, the main cravings he hears from clients focus on options tied to futures—and not a physical slice of Bitcoin.
The Numbers Behind the Futures
Since the inception of Bitcoin futures, CME has witnessed 20 successful expiration settlements, which is basically a fancy way of saying they’ve kept this ship sailing quite smoothly. With more than 3,300 accounts participating, in 2020 alone, there’s been an average of 7,000 Bitcoin futures contracts traded daily. That’s roughly 35,000 BTC, folks—like a Bitcoin buffet where everyone is gorging but somehow leaving hunger pangs for more options!
The Institutional Interest Blooms
As the crypto world spins faster than a college student cramming for finals, institutional interest in Bitcoin is on the upswing. McCourt pointed out that while interest is growing, institutions are still tiptoeing around the market cautiously, needing time to get acquainted and obtain necessary approvals. Think of it like that awkward first date where the person is charming, but you’re still checking for red flags!
Who’s in the Game?
Current participants largely include hedge funds, commodity trading advisors, asset managers, and even some crypto-loving hedge funds looking to explore this brave new world. It sounds like a gathering of curious cats who, let’s be honest, are just trying to figure out who will bring the catnip.
The Impact of Bakkt’s Launch
And just when you think you’ve seen everything, along comes Bakkt, launched by the Intercontinental Exchange, which began offering physically settled Bitcoin futures in late September. However, its entrance onto the stage was less like a grand debut and more akin to a muffled sneeze—hardly what the crypto crowd anticipated! Following its launch, Bitcoin prices took a hit, dropping from nearly $10,000 to below $8,000, making investors feel like they were on a rollercoaster they didn’t sign up for.
Looking Ahead
Adam White, Bakkt’s chief operating officer, voiced hopes that their offerings would contribute to market price discovery in the long run, proving that sometimes patience is key, even if it feels like waiting for your internet to come back on during a binge-watch session.
