Will The CBOE’s Exit On Bitcoin Futures Hurt Its Profits?

Chicago Board Options Exchange (CBOE) and CME Group were the main traders for bitcoin futures contracts in the United States. This was considered a pretty risky move by both exchanges when they announced it last year but they forged on. However, circumstances changed and CBOE closed its Bitcoin futures markets on March 15, 2019 and the last contract expired on June 19.

When Cboe started its bitcoin futures market, it expected that there would be a huge increase in terms of trading volume as there were signs that a significant amount of traders wanted to trade in bitcoin. Unfortunately, those predictions did not come true. Yes, there was an increase but not as explosive as many experts predicted and the bitcoin economy was not majorly impacted.

Strangely, many institutional investors took a fancy to Bitcoin futures and other kinds of crypto-based futures contracts because they were less risky than actually trading in crypto. When CBOE announced that it would be ending its Bitcoin futures offerings in March, many investors were surprised and disappointed. ]

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The main reason for the CBOE closure was that there was a notable lack of interest in the product. Cboe did say it might reconsider reopening its bitcoin futures when things look more favorable.

In a statement, Ari Rastegar, CEO of Rastegar Property, said

Bitcoin futures were created to attract institutional investors in the first place, and its two key components are hedging against volatility and bringing liquidity to the marketplace. With that said, bitcoin futures no longer being traded on CBOE signified a lack of faith and a lack of interest from institutional investors.

Was Decision To Exit A Hasty One?

However, it seems that Cboe may have been a bit hasty in making its decision. Since CBOE’s futures market closure, CME’s Bitcoin futures markets have seen a marked increase. In the two and a half weeks since the closure, bitcoin prices have jumped to $4800 and they have kept climbing. As of June 1, bitcoin stands at $8500.

This price increase has been reflected in a jump in bitcoin trading volume on the Bitcoin futures markets. In May, CME reported a new daily record of 33,677 contracts while June 26 saw a new 24-hour record for the futures market with a trading volume worth $1.6 billion.

That is a big jump and CBOE may have just missed out on getting a slice of the pie!