The frequency of futures trading on the Chicago Mercantile Exchange (CME) is usually a reliable indicator regarding Bitcoin’s price. This is why Monday’s CME gap is curious having started right before Bitcoin’s significant uptick.
Monday was an explosive day for BTC. The leading cryptocurrency rose from the $9,700 price point to around $10,400 or so. The massive green candle caught many off-guard and led to a strange gap on Bitcoin’s futures trading on CME.
CME was blamed for much of Bitcoin’s bearish trend during 2018 as speculators pushed the price downward. However, the futures exchange has been exploding in volume during 2019. Last week, Forbes reported that CME Bitcoin futures trading was averaging a whopping $370M trading per day. As CME Group managing director Tim McCourt told Forbes, “Year-to-date, bitcoin futures are averaging 7,237 contracts per day, which is a 132% increase from the same period last year.” Related: Looking to buy and sell Bitcoin? Check out our guide on the best cryptocurrency exchanges for trading Bitcoins. This rapid increase of CME-based futures trading for BTC is unexpected, given that the volume was anemic during 2018. Moreover, it indicates that institutional money and traditional investors are trading Bitcoin more than ever before. As CryptOrca (@CryptOrca) writes recently, Bitcoin futures trading on CME is already off to a strong start this September.Large Labor Day CME gap. $BTC pump started right when the CME closed. pic.twitter.com/klDPOb12fL
— Alex Krüger (@krugermacro) September 2, 2019
However, we should bear in mind that CME’s futures trading does not use actual BTC to make trades. Instead, it involves IOUs which does not directly influence Bitcoin’s actual market mechanisms. Instead, it applies soft pressure on the market. However, one can only imagine the impact of real Bitcoin trading on a futures market. It would further increase demand and lessen the supply, applying strong price pressure upward. Luckily, with Bakkt set for release by end of the year, we will be able to see this market impact soon enough. Given that CME’s daily trading volume for Bitcoin futures is rising, many of these traders will likely move to Bakkt. CME’s success is definitely a positive indicator for BTC derivatives trading in the near future. Do you feel that CME influences the Bitcoin market significantly? Let us know your thoughts below in the comments. Buy and trade cryptocurrencies with a 100x multiplier on our partner exchange, StormGain.$BTC $BTCUSD #bitcoin
— CryptOrca (@CryptOrca) September 2, 2019
Some solid volume traded today at #CME pic.twitter.com/CekhpIxRza
Images are courtesy of Shutterstock, Twitter.
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Anton Lucian
Raised in the U.S, Lucian graduated with a BA in economic history. An accomplished freelance journalist, he specializes in writing about the cryptocurrency space and the digital '4th industrial revolution' we find ourselves in.
Raised in the U.S, Lucian graduated with a BA in economic history. An accomplished freelance journalist, he specializes in writing about the cryptocurrency space and the digital '4th industrial revolution' we find ourselves in.
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