Cboe Discontinues Bitcoin Futures for Now

March 15, 2019
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The Chicago Board Options Exchange (Cboe) has announced that it is dropping any new bitcoin futures contracts this month. The decision may have been necessitated by low trading volumes. Cboe indicated that its CFE futures platform was currently pondering its position on cryptocurrency derivatives trading.

Also read: Canadian Capital Market Regulators Mull New Cryptocurrency Rules

Cboe Considers Future of Bitcoin Futures

In a statement on March 14, the exchange revealed: “CFE is not adding a Cboe Bitcoin (USD) (“XBT”) futures contract for trading in March 2019. CFE is assessing its approach with respect to how it plans to continue to offer digital asset derivatives for trading. While it considers its next steps, CFE does not currently intend to list additional XBT futures contracts for trading.”

Current bitcoin futures contracts remain available for trading until June when they expire. The Cboe futures were greeted with wild enthusiasm when they first entered the market in December 2017, when BTC prices were at their highest. Together with the Chicago Mercantile Exchange (CME) bitcoin futures, which launched around the same time, the instruments were viewed as major stepping stones into the mainstream, key to attracting institutional capital into the cryptocurrency market.

However, the events that followed in the ensuing months did not inspire a lot of confidence, as XBT trading volumes nosedived, in part due to the 2018 sustained market downturn.

Declining Volume

According to research company Tradeblock, XBT has been losing ground to bitcoin futures from the Chicago Mercantile Exchange whose volumes have dwarfed XBT’s in recent months despite starting on an equal footing. Overall, bitcoin futures trading volume has fallen since reaching a peak in the summer of 2018.

“We tracked notional bitcoin futures trading volume at both the CME and Cboe since December of 2017. While both firms launched competing products, in the same month over the course of 2018, the CBOE lost significant market share to the CME,” Tradeblock explained.

CME vs CBOE Bitcoin Futures Notional Trading Volume Over Time

The report further indicated that while bitcoin futures trading volume initially saw significant growth each month following inception, spot trading activity was steadily declining during the same period.

“Given these divergent trends, total futures trading volume across the CME and CBOE reached near parity with total spot trading volume across five of the largest U.S. accessible digital currency exchanges. This changed somewhat recently as futures volume has fallen while spot volume has picked up modestly,” Tradeblock added.

Now, with Cboe dropping bitcoin futures, it will be interesting to see how these trends change, as the market prepares to launch several new bitcoin futures platforms. Bakkt, Erisx, and Coinflex are all planning to launch bitcoin futures.

What do you think about Cboe’s decision to discontinue bitcoin futures? Let us know in the comments section below.


Images courtesy of Shutterstock and Tradeblock.


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