Friday contracts debuted on Sept. 30 with a bang, becoming CME’s most successful crypto futures launch ever.

Chicago Mercantile Exchange’s (CME) bitcoin (BTC) futures that expire on Friday are ideally suited for news traders looking to bet on key U.S. economic data releases, CF Benchmarks’ CEO Sui Chung said, explaining the performance of the recently launched contracts.

The CME debuted cash-settled Friday futures, sized at one-50th of one BTC with lower margin requirements, on Sept. 30 to make the futures product accessible to retail investors. The so-called BFF contract settles every Friday at 16:00 New York Time and tracks Cf Benchmark’s Bitcoin Reference Rate – New York (BRRNY) variant. A new contract is listed Thursday at 18:00 New York time, allowing market participants to trade the nearest two Fridays at any point in time.

The global derivatives giant registered a first-day trading volume of over 31,000 contracts across two different contract weeks, becoming the exchange’s most successful crypto futures launch ever.

“Unlike monthly contracts, which are influenced by a wide range of events over four weeks, the weekly contracts allow investors to better express views on Bitcoin’s reaction to specific events, such as U.S. macro data releases,” Chung told CoinDesk in an interview.

Bitcoin has emerged as a macro asset since the coronavirus-induced crash of 2020, with short-term traders/speculators making bets by following notable news announcements and data releases like the monthly U.S. inflation figures and the nonfarm payrolls data.

The Friday futures provide several benefits to news traders, including low basis or price differential relative to spot prices, lower rollover costs and more targeted trading strategies.

The shorter duration limits the gap between futures and spot prices, ensuring a lower premium than monthly standard and micro futures contracts. The lower premium means the contango bleed, or the cost incurred from moving positions from the impending expiry to the following Friday expiry, is relatively less than extended duration contracts, leading to improved profitability.

“The reduced time horizon of the weekly contracts generally results in a low basis compared to their monthly counterparts, simplifying analysis for retail traders,” Chung said.

Chung added that the alignment between the Friday futures expiry and the daily NAV calculation of U.S.-listed spot ETFs, most of which refer to the BRRNY, enhances market liquidity. The more liquidity, the easier it is to execute large orders at stable prices, and the more efficient the price discovery mechanism.

Note that on offshore unregulated exchanges, retail traders prefer perpetual futures, which use the funding rate mechanism to keep prices aligned with the spot market. The funding fee is collected from traders every eight hours. These rates are volatile, adding an element of uncertainty and unpredictability.

Related

Source: Vietnam Insider

The CME is already the top bitcoin futures exchange by open interest, while the offshore, non-regulated Binance dominates the spot market.

Futures powerhouse Chicago Mercantile Exchange (CME) plans to offer spot bitcoin trading to clients as demand for the product mounts among market participants, the Financial Times reported on Thursday.

CME is already the top bitcoin futures exchange by open interest, while offshore, non-regulated Binance dominates the spot market.

The exchange has held discussions with traders who want to trade bitcoin on a regulated marketplace, the FT reported, citing people with direct knowledge of the talks.

CME’s spot trading business could be run through the EBS currency trading venue in Switzerland, the report added.

The exchange did not want to comment on the report.

The spot market will complement the CME’s existing standard and micro futures contracts, which are widely considered a proxy for institutional activity, and help the exchange become more dominant in the crypto market. The CME is already the top bitcoin futures exchange by open interest, while the offshore, non-regulated Binance dominates the spot market. Coinbase (COIN), the only U.S. traded crypto exchange, is No. 3 by daily trading volume.

The availability of the spot market means traders can now set up complex multi-leg strategies involving spot and futures markets in one regulated place. Carry traders are known to short CME futures against long spot market positions on other exchanges or in spot ETFs.

“Crypto exchanges might lose some business with the potential debut of a bitcoin spot market on the CME, a global derivatives giant, as the present bull run is particularly driven by institutions, who prefer to trade on regulated avenues,” Markus Thielen, founder of 10x Research, said.

Related

Source: Vietnam Insider

With a notional open interest (OI) of $3.54 billion, CME is now the second-largest bitcoin futures exchange.

The regulated Chicago Mercantile Exchange (CME) is climbing ranks on the list of largest bitcoin (BTC) futures and perpetual futures exchanges by open interest in a move reminiscent of the early stages of the 2020-21 bull run.

With a notional open interest (OI) of $3.54 billion, CME is now the second-largest bitcoin futures exchange, up from the fourth position seen weeks ago, according to Coinglass. Notional open interest refers to the U.S. dollar value locked in the number of active or open contracts.

Keeping the top spot is the offshore unregulated exchange Binance, with an open interest of $3.83 billion. That’s 8% higher than the CME.

Open interest in CME’s cash-settled futures contracts recently surpassed the 100,000 BTC mark for the first time on record. Similarly, the CME’s share in the BTC futures market rose to a new lifetime high of 25%.

CME’s standard bitcoin futures contract is equivalent to 5 BTC, while the micro contract is sized at one-tenth of 1 BTC. The standard ether futures have a contract size of 50 ETH, while micro futures are equivalent to one-tenth of 1 ETH. Most open interest in offshore exchanges is concentrated in perpetual futures rather than traditional futures contracts. Perpetuals are futures with no expiry and use the funding rate mechanism to keep perpetuals in sync with the spot price.

Per some observers, CME’s ascent is a sign of an institutional-led rally. Bitcoin has risen 27% this month amid lingering macroeconomic uncertainty and spot ETF optimism.

Retail investors, too, seem to have played their part, as evidenced by the uptick in the futures-based ETFs. The rolling five-day volume in ProShares’ industry-leading bitcoin futures ETF jumped by a staggering 420% to $340 million last week, according to data provided by Matrixport. The ProShares ETF invests in the CME bitcoin futures.

André Dragosch, head of research at Deutsche Digital Assets, suggests otherwise. Per Dragosch, CME’s rise results from the unwinding of bearish bets on offshore exchanges.

“CME’s share in $BTC futures OI might have increased relative to other exchanges, but the aggregate amount of BTC futures & perps OI has not increased in BTC terms, implying that long futures positions were not the main driver behind the recent surge,” Dragosch said on X.

“Price spike was rather induced by short squeeze w/ a reduction in aggregate open interest,” Dragosch added.

Related

Source: Vietnam Insider