CME Claims Institutional Interest in Bitcoin Will Grow

Speaking with MarketsMedia, Tim McCourt, global head of equity index and alternative investment products at the CME Group, noted that building a new market around such a radically new asset is going to take time. He told the publication:

“The institutional interest in bitcoin is growing but they need time to become familiar with the market and get approval to use new products.”

CME Futures Contracts?

McCourt gave his comments shortly after the CME Group announced new options for its Bitcoin futures contracts. The new trading products are expected to launch in the first quarter of 2020 but are apparently still pending regulatory approval.

Bitcoin options are coming in Q1 2020. @TimMcCourtCME joins @Options @FTSERussell @QuikStrike1 on #TWIFO to talk crypto appetite and how these new options contracts are designed to help traders manage and hedge their bitcoin price risk.

🎧 Listen here: https://t.co/XLwauqkls0

— CME Group (@CMEGroup) September 27, 2019

The CME Group first launched its Bitcoin futures market in late 2017. The debut of the product coincided neatly with the start of the crash that would see prices plummet over the next twelve months from near $20,000 to around $3,200. Since they launched, the contracts have had 20 successful expiration settlements with more than 3,300 participants trading them. This year, the CME claims that the fiat equivalent of 35,000 BTC had traded each day. Being non-physically settled, no Bitcoin actually changes hands with the CME contracts, nor will it with the forthcoming options products. McCourt claims the introduction of options is directly influenced by customer demand:

“Since we launched bitcoin futures in December 2017, the number one demand from customers has been for options on our futures.”

Institutional Investors Will Come

McCourt also commented that current institutional interest in the CME products is driven by hedge funds (cryptocurrency-focused and otherwise), CTAs, and asset managers. The CME position that institutional interest will continue to grow with greater familiarity with the market echoes that of Kelly Loeffler, the CEO of Bakkt. Following the rather unspectacular launch (that has recently seen a sharp drop in interest, as reported by BeInCrypto earlier today), Loeffler highlighted trust in a company blog post as a key factor in establishing a brand new market. By bringing greater regulatory clarity and an established price discovery mechanism to Bitcoin, she believes Bakkt will help to garner this trust from all levels of investors. She’s confident in Bitcoin’s ability to grow with the help of her company:

With operations, cybersecurity and controls, along with end-to-end-regulation demanded by investors and consumers, confidence in using digital currency — not just to invest, but to also use in transacting — will grow.

Do you think efforts by Bakkt or the CME Group will make Bitcoin investment more attractive to institutional investors? Comment your thoughts below. 

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