In the second quarter of 2021, Chicago Mercantile Exchange’s (CME) regulated bitcoin (BTC) and ether (ETH) futures saw record participation from large traders. The number of large open interest holders, or entities holding at least 25 bitcoin futures contracts, averaged a record 107 in the second quarter, according to an email from CME to CoinDesk. Similarly, ether’s large open interest holders averaged 62 in the same period. CME explained the robust participation from large traders by saying, Bitcoin futures institutional interest continued to increase throughout the quarter as investors sought regulated venues/products to hedge rising market volatility and manage risk and exposure.
The Commodity Futures Trading Commission (CFTC) regulates the CME futures. The 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. CME’s regulated and cash-settled futures have long been a preferred choice for institutions looking to gain exposure to the cryptocurrency without having to own it.
The record participation from large holders came as top cryptocurrencies extended the first quarter rally. Bitcoin rose 7% in three months to June, confirming an 84% rise for the year’s first half. Ether gained 61% in the first six months. This demand for hedging tools also lifted trading volumes and open interest in BTC and ETH futures and options to all-time highs in the first half, according to CME. Trading volume refers to the number of contracts transacted on a given day, while open interest refers to the number of contracts active at any given time. An increase in open interest represents an influx of new money into the market.
Open interest in standard bitcoin futures contracts averaged a record 14,800 contracts through the first half, a 15% rise compared to 2021. Meanwhile, open interest in bitcoin options averaged a record 9,400 contracts, confirming an impressive 175% rise versus 2021. CME plans to list futures tied to the ether-bitcoin ratio later this month, subject to regulatory approval. The exchange has recently expanded its options product suite by listing weekly bitcoin and ether expiries.