The Chicago Mercantile Exchange (CME) has seen a remarkable surge in crypto derivatives trading, riding the wave of Bitcoin ETF speculation. As anticipation grows for a spot Bitcoin ETF approval by the SEC in January, trading activity in Bitcoin futures has notably intensified across platforms like CME Group. Surprisingly, some traders are also using futures to wager against ETF approval, as reported by Bloomberg on December 1.
The recent Bloomberg report highlighted an all-time high in open interest (OI) on CME, representing the total unsettled contracts. Meanwhile, data from Deribit pointed out a surge in BTC futures OI from $481 million to $616 million between November 29 and November 24.
“I think it’s uncertain what’s going to happen, market participants need proper tools to hedge against that risk.”
Giovanni Vicioso, CME’s global head of cryptocurrency products, mentioned that the uncertainty around approvals prompted many traders to take short positions in BTC futures. These futures contracts, like ProShares BITO, enable speculators to bet on the future asset price without direct asset buying or selling.
November witnessed a 13% surge in Bitcoin futures trading volume on CME compared to October, which itself was 35% higher than September. Vicioso sees this uptick as a clear sign of institutional involvement in the crypto space.
While the SEC has historically rejected spot Bitcoin ETF applications, the current landscape primarily favors futures-based ETFs like those traded on CME. These futures contracts, with defined expiration dates, attract traders seeking to hedge against approval deadlines or key price influencers such as Bitcoin halving events.
Despite past rejections, ETF analysts are increasingly optimistic about approval prospects. Bloomberg’s ETF analyst, James Seyffart, anticipates a window for potential spot Bitcoin ETF approval between January 5 and 10, 2024. In a notable shift, analysts have raised their approval odds to 90%, foreseeing a simultaneous green light for multiple ETFs by the SEC.
