CME Bitcoin Futures Volumes Hit 4-Month Low, Should We Be Worried?

Bitcoinist September 19, 2019
Updated 2019/09/19 at 9:04 PM
4 Min Read

The market for CME Bitcoin futures shrank to its lowest level in four months, with volumes about 50% lower than peak activity in July. The futures market behavior was viewed as an indicator for weakening Bitcoin (BTC) performance.

Futures Potentially Sway Bitcoin Price Direction

The futures market posted the lowest volumes in four months, just as BTC broke down below $10,000 again, failing to perform another rally. BTC slid to $9,896.49 after a one-hour crash early on Thursday.

CME this week – lowest volumes in 4 months

— skew (@skew_markets) September 19, 2019

The futures markets may indicate both moods and potential attempts to sway the BTC market. The launch of the cash-settled futures was seen as potentially setting off the long slide in BTC prices in 2018.

Now, the low CME activity also coincides with the imminent launch of the Bakkt ICE futures market. This time, there are still questions on how the product will affect BTC spot prices. Bakkt will use a physical delivery settlement, instead of cash settlement.

Q: Why is #Bitcoin stuck at $10K?

A: Its because people haven’t forgot the CME future launch in December 2017, which made BTC crash 80%.

The fear for #Bakkt launch is still there, and I’m curious to see how fear affects the price as we move closer to the launch date (Sep 23)

— Crypto Welson ? (@CryptoWelson) September 13, 2019

Sentiment surrounding BTC prices are still showing the prevalent mood is “fear”. At this point, it is still unknown what type of investors would enter the futures markets, and how they would differ in sentiment and activities in comparison to spot market traders.

Traders are still finding unconclusive evidence that BTC prices are somehow swayed by the behavior of CME futures:

of a 2nd example of my fear. The out of no where dump in bitcoin on 9/6, it started at 1pm. The Bitcoin futures dump started at 1235pm on the CME futures. It seems to me bitcoin is now controlled the way equities markets are: by a small minority trading in an illiquid futures mkt

— Deezul Petrossian (@DeezulP) September 11, 2019

Bakkt Physical Futures Arrive in Days

It is uncertain if the new Bakkt futures would have a similar effect. In theory, traders could acquire physical BTC by acquiring a contract and holding onto it until after settlement. Then, they would be credited with actual BTC.

Despite the lowered volumes, the CME has increased the spot month position limits. As BTC remains unpredictable, it is possible that there is also suddenly increasing interest in trading. BTC gains usually follow a pattern of fast appreciation and long in-between periods of low activity or corrections.

The CME futures market also proved to be more active in comparison to the CBOE product, which was discontinued just before the big summer rally which sent BTC to a yearly peak. BTC cash-settled futures remain a limited tool for investments, with markets closing upon events of higher volatility.

What do you think about Bitcoin futures? Share your thoughts in the comments section below!

Images via Shutterstock, Twitter @DeezuIP @Cryptowelson @skew_markets

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