After that, cryptocurrency futures still need to be oriented to retail investors.
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This article from Coindesk , the original author: Galen Moore
Odaily Planet Daily Translator | Moni
For media reporters who care about Bitcoin derivatives, this is definitely the best time, because it has been very eye-catching recently. But for those who trade Bitcoin derivatives, everything seems to be uncommon and there are not too many waves.
On Friday (September 20th), the Chicago Mercantile Exchange (CME) announced that it will offer options trading for its bitcoin futures contracts, which is a surprising move, as the volume of options trading so far is The proportion of futures and swaps is almost zero. Even so, looking at the entire cryptocurrency industry, it’s hard to find a reliable option counterpart like CME Group. More importantly, CME Group does not need to rebuild the infrastructure to provide options trading services directly to customers.
But the question is, why is CME Group still going to launch the options business “in a hurry” when the transaction is small?
In fact, in the regulated cryptocurrency derivatives market, CME Group has been worried about its leadership position, one of the important reasons is BakktThis week officially launched a regulated physical delivery bitcoin futures contract product. The biggest difference from the similar products of CME Group is that Bakkt customers will get the actual bitcoin after the contract expires instead of the cash settled at the agreed price.
Maybe CME Group is concerned that those who trade Bitcoin in the market will think that it is more important to deliver futures contracts in kind, so they decided to make some moves before Bakkt went online, more or less able to suppress the strength of Bakkt. The limelight.
But, is Bakkt, which has just launched a physical bitcoin futures contract, really pulling the wind?
Speaking of Bakkt, the one-day physical delivery bitcoin futures contract they just launched and the “2019 October” monthly physical delivery bitcoin futures contract seem to be unsatisfactory. The first day trading volume of the October monthly futures contract is only 71 BTC, which is not comparable to the futures contract products launched by CME Group in December 2017 – but it should be noted that CME Group launched futures contracts. It coincides with the fact that bitcoin prices have reached record highs, so it is somewhat unfair to compare them with Bakkt in the current market environment.
In contrast, Bakkt’s one-day physical delivery bitcoin futures contract product is still quite attractive. Because, if the trader tries the “T+2” settlement method (2 days after the trading day) and establishes a forward curve of the continuous rolling contract, then basically many trading possibilities can be realized, for example: through “bypass” A legal currency transaction regulated by the US Commodity Futures Trading Commission, or a permanent swap product that emulates BitMEX, and so on.
However, no traders have traded Bakkt monthly Bitcoin futures contracts, and the single-day bitcoin futures contract has a trading volume of 2 BTC on Monday (September 23).
Cryptographic currency futures still need to be oriented to retail investors
The first regulated bitcoin futures was launched by CME Group in December 2017 – just before bitcoin prices fell sharply by 83% from historical highs. However, CME Group’s bitcoin futures trading volume did not exceed $100 million, so it is difficult to say that futures trading brings reason to the market.
Many cryptocurrency practitioners feel that new products like physical settlement of Bitcoin futures contracts are like opening a bitcoin exposure, which will increase the demand of institutional investors, but the compliance department insists on monitoring these products. Therefore, the growth rate of new product demand is not as fast as people expected.
However, if you search for the keywords “Bakkt is too low”, you will understand that cryptocurrency futures still need to be oriented to retail investors. If you are in 2017, look at BitcoinThe price is rising every day. Who can think of a plunge on this Tuesday (September 24)? Otherwise, you must take the time machine to make a bit of a bit of bitcoin. So let’s be awake. After 9012, those who know the most about cryptocurrencies have realized that institutional investors’ interest in Bitcoin is slowly evolving, even as it is developing.
For institutional investors, cryptocurrency derivatives provide an easy-to-understand solution that also addresses operational barriers associated with hosting, investment, and risk (supervised bitcoin futures structure, in fact, and frozen concentrated orange juice) There is no difference in futures).
However, today’s largest share of cryptocurrency transactions are conducted on unregulated exchanges that do not operate in a clearing house model but provide up to 100 times for retail investors. Leverage. Such a business makes those supervised asset management companies envious and naturally very interested.
Although the industry has been questioning the reliability of the transaction volume reported by the exchange (especially OKEx and Huobi), bitcoin traders on the OTC platform know that there is liquidity in the market, and their hedging strategy relies on This fluidity. In addition, the funds for these leveraged transactions may all come from cryptocurrency hedge funds. As one trader said, those people are like “fallen gamblers” who trade on their own accounts.
The structure of Bitcoin futures is similar to that of concentrated orange juice futures, but everyone knows that orange juice concentrates become very flammable when mixed with volatiles. Bitcoin has some important qualities compared to other asset classes, and institutional investors consider these qualities when evaluating bitcoin derivatives.
Let’s take the bitcoin futures market as an example. In fact, there is no natural hedging in futures. If you don’t think so, you can compare the global operating expenses of gold miners and bitcoin miners.
The road ahead
The cryptocurrency derivative is a “fragrant scent” and paves the way for institutional investment, but it is obviously not enough to make this table full of banquets. But for now, the futures trading volume of CME Group has pointed out a way for investors to see that Bitcoin futures have a promising future.
You may have seen the chart show that the CME Group’s trading volume has gradually increased since May, and the time point is very close to the double-digit increase in bitcoin prices this year. In July, ShibaThe volume of trading in the futures of the firm has surged, and it is now basically returning to the modest growth since the first quarter.
Now, at least four startups are preparing new cryptocurrency derivatives for US institutions and other regulated markets, all based on physical liquidation. However, it remains to be seen whether physical delivery of Bitcoin futures contracts will increase market participation – of course, this is not always important for derivatives built on other asset classes.
Finally, one thing is certain, there is no new financial instrument that can “release” institutional needs, as most organizations are just beginning to get in touch with Bitcoin, a new asset, but institutional investors’ Interest has begun to grow, albeit slowly, but this road has been extended.