CME Group Says Bitcoin Futures Growing Demand from Institutional Investors

Chicago-based exchange operator CME Group stated its bitcoin futures contracts increased popularity last quarter, with an increase of 61 percent on the number of open contracts from a year earlier as a result of developing interest from institutional investors.

The number of outstanding positions, or open interest, increased to 4,629 contracts, up from 2,873 in the third quarter of last year, CME stated Monday in an announcement. Furthermore, in spite of the quarter’s 25 percent drop in bitcoin price, the open interest for the CME’s contracts was down only 1 percent from second-quarter levels.

The normal everyday volume of contracts traded during the quarter was 5,534, up 10 percent from the earlier year. As per the exchange, it was the equivalent of 27,670 bitcoin, or $289 million.

“Institutional flow remained strong, with 454 new accounts added, compared with 231 added in the third quarter of 2018,” CME stated. Entities holding over 25 bitcoin, utilized as a proxy for big investors, increased to 47, from 45 in the second quarter of 2018 and 34 in the third quarter of the same year.

CME launched its bitcoin futures in 2017 and outlived a rival product from another exchange firm, Cboe Global Markets, which prematurely ended its own contract earlier this year.

However, the CME sees new competition from Bakkt, a startup supported by Atlanta-based Intercontinental Exchange, which launched another bitcoin-futures contract in September, intending to draw in institutional investors who would like to bet on the digital currency.

Around 50 percent of the CME’s bitcoin futures trading volume during the third quarter was outside the U.S., with 26 percent originating from the Asia Pacific region and 21 percent from Europe and the Middle East, as per the exchange.