08.24.2022

CME Accelerates Crypto Roll Out

08.24.2022
Shanny Basar
SIP Speeding Up

CME Group has introduced one new cryptocurrency product per month this year across reference rates, indexed and tradable products compared to one per quarter in 2021.

On August 29 CME will launch Bitcoin Euro and Ether Euro futures, pending regulatory review. Tim McCourt, global head of equity and FX products at CME Group, told Markets Media that Bitcoin Euro and Ether Euro futures are the group’s eight and ninth crypto contracts.

Tim McCourt, CME

“In 2022 we have introduced one new crypto product per month across reference rates, indexed and tradable products,” he added. “The cadence has increased from one per quarter in 2021.”

McCourt continued that the new contracts are being introduced  due to the feedback CME has received from customers, Euro and US dollar coming close to parity and as  Euro-denominated cryptocurrencies are the second highest traded fiat behind the US dollar.

In addition the EMEA region represented 28% of total Bitcoin and Ether futures contracts traded so far this year at CME, up more than 5% versus 2021.

Edmond Goh, head of trading at B2C2, said in a statement: “The launch of euro-denominated Bitcoin and Ether futures from CME Group will help meet the growing demand for regulated and robust, non-USD crypto derivatives.”

McCourt continued that the new contracts will open up trading opportunities with derivatives, exchange-traded notes, exchange-traded funds and CME’s other liquidity pools such as in foreign exchange.

Kaiko, the crypto data provider, said in a report that Bitcoin and Ether Euro denominated futures already trade on the BitMEX exchange. “Daily volumes for the contract on BitMEX are at their lowest levels this year,” added the report.

Source: Kaiko

BitMEX has also announced the launch of crypto’s first-ever perpetual foreign exchange swap contracts. Kaiko said: “These FX swaps allow investors to trade the product 24/7, even when the traditional FX market is closed and could be another widely used product in the derivatives market.”

On September 12 CME is also launching options on Ether futures, pending regulatory review.

Sam Newman, digital assets head of brokering at TP ICAP, said in a statement: “With the upcoming Ethereum protocol merge, we expect this new contract to see significant interest from both our traditional customers as well as crypto native clients.”

Volumes

In its results CME reported that the second quarter was a record across all cryptocurrency products with average daily open interest (OI) of 106,200 contracts, and was also the second highest quarter for average daily volume of 57,400 contracts.

In the second quarter Ether futures achieved a record average daily volume of 6,600 contracts, up 27% from the first quarter. CME reported that Ether futures ADV rose to 7,900 contracts in July and open interest rose 7% over June.

McCourt added that volume and open interest have grown across all CME’s crypto contracts.

“Institutional interest has been unimpeded by the drop in valuations with an increase in large OI holders,” he said. “CME has been a safe haven as volatility has led to investors looking to access crypto through regulated venues and products.”

CryptoCompare’s Exchange Review for July said spot trading volumes across all centralised crypto exchanges fell 1.3% to $1.4 trillion, the lowest monthly trading volume recorded since December 2020.

Source: CryptoCompare

However, derivatives trading volume rose for the first time since March, increasing 13.4% to $3.1 trillion which CryptoCompare said indicates an increase in speculative activity as traders believe there is room for further upside in this rally and as traders speculated on the impact of the Ethereum Merge.

In July CME’s Ether and Bitcoin futures volumes fell 9.9% to $36.5bn on aggregate according to CryptoCompare. The report said: “235,730 Bitcoin futures contracts were traded in July, down 7.11% since June. This was the first recorded decline in the number of Bitcoin futures contracts traded on the CME in four months.”

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