In a recent turn of events, the Chicago Board Options Exchange (CBOE) has announced that the firm will not be renewing its USD-settled Bitcoin (BTC) futures contract — effectively halting the corresponding trade markets on its CBOE Futures Exchange (CFE) platform.
On Dec 11, 2017, CBOE launched the world’s first Bitcoin Futures contract. The decision to not renew this contract was made public through a product update document released on March 07, 2019, just 15 months after the Bitcoin futures contract was first introduced. According to the document, the currently listed XBT futures contracts will remain listed until their expiry in June later this year.
It remains to be seen how the delisting of XBT products will affect the overall daily volume of Bitcoin (BTC) in the weeks that follow the expiration of the remaining contracts. Since XBT was a cash-settled product with 44 percent collateral needed for short terms of three months, expert traders are expecting a rather positive retracement of Bitcoin prices on the market.
Bitcoin Delisted Following Consistently Low Market Volume
Currently, CBOE’s Bitcoin futures contract “XBT” competes with the “BTC” futures contract from rival futures derivatives exchange operator Chicago Mercantile Exchange (CME).
Despite both of these contracts having no physical backing, they serve as an important investment vehicle for large investment firms — including institutions, hedge funds, and accredited investors — allowing them to speculate on the price of Bitcoin in the near future without the challenges of actually holding any.
XBT contracts are for only one bitcoin each, whereas CME BTC contracts are at five bitcoin each. Experts suspect that this fact may have made CME’s Bitcoin contracts more attractive to investors, as they provide the vital volume boost it needed to retain dominance — despite the slow 2018 market.
CBOE, on-the-other-hand, entered the crypto market at the height of the Bitcoin bubble in 2017. Despite having contributed to some initial growth in Bitcoin prices, the charts quickly entered into a downward slope shortly after the introduction of its Bitcoin futures plan.
Failed Bitcoin ETF Launch, Failed Bitcoin Futures Product
Ever since CBOE entered the cryptocurrency market, the firm has pushed hard to get approval for a physically-backed Bitcoin Exchange Traded Fund (ETF).
However, throughout 2018, the U.S. Securities and Exchange Commission (SEC) has rejected or delayed several Bitcoin ETF proposals from a variety of investment firms, leading many to wonder whether the SEC is simply playing hardball or is genuinely unsatisfied with current proposals.
During this time, CBOE partnered with investment management company VanEck and SolidX, a mysterious blockchain startup, to unsuccessfully apply for a rule change proposal to the SEC on several occasions.
What is your opinion on the CBOE Bitcoin (BTC) futures delisting? Do you think we will see more Bitcoin futures launched this year? Let us know your thoughts in the comments below!