CME Group last week recorded the highest Bitcoin futures trading volume in its fifteen-month existence, prompting further suggestions that the cryptocurrency market is staging a genuine recovery. The world’s largest futures exchange announced Friday that the prior day’s trading, which took place on April 4, hit 22,500 contracts, beating the previous record by 4,200. Some think this means the bear market is coming to an end, while others believe it means further woe could be to come.
CME Bitcoin futures had a record trading day on April 4, hitting an all-time high volume of over 22.5K contracts (112.7K equivalent bitcoin), surpassing previous record of over 18.3K (64.3K equivalent bitcoin) on February 19. More #Bitcoin futures. $BTC_F https://t.co/kWYK203apA pic.twitter.com/CX5nF8dXyv
— CMEGroup (@CMEGroup) April 5, 2019
Cboe Customers Turn to CME
The record-breaking day came three days after Bitcoin’s $1,000 jump and must be a bitter pill for the Cboe to swallow, following their decision to pause their Bitcoin futures options less than a month ago. Of course, it is unknown how many of the CME contracts that were taken out on Thursday came from former Cboe customers, but it is likely that Cboe’s closure is responsible for a certain percentage of the extra volume.
CME began offering Bitcoin futures contracts in December 2017, two weeks before BTC topped out at $20,00 and began a fifteen-month downtrend until the recent upwards price action. Many credit the introduction of futures contracts as a key reason why Bitcoin crashed the way it did, citing manipulation by the big banks in order to force the price lower after shorting it.
Predicting the Futures
Seeing as CME Bitcoin futures are cash settled, this sudden increase in volume doesn’t necessarily translate to bullishness for the overall market, or signal that we are finally out of the bear market. Plenty in the crypto community have emphasized this point, reflecting on the theory that a single buyer was behind the price gain last week and that one pair of deep pockets isn’t enough to end such a brutal bear market.
Futures contracts are essentially bets on what Bitcoin’s price will be after a set time frame, usually a month, meaning that record numbers of people are betting that Bitcoin will be either significantly up or significantly down at the end of the period. And, as we saw in 2018, when large numbers of people with the right influence want Bitcoin to go one way, it usually does.
$BTC #Bitcoin – I have to laugh at posts about “If you didn’t make it thought the bear market you shouldn’t be posting now”… Are we not seeing the same chart here… Twitter is making it think the bear market is over. The only catalyst was some random dude was buying it. pic.twitter.com/glDbQdR1Lv
— IRONHAM (@IGOSODAMNHAM) April 7, 2019
