CME Futures Volume vs Open Interest

Yesterday’s morning report has raised some questions regarding the Volumes and Open Interest of the CME futures contract. To show volume comparisons to the BTC spot market on the major crypto exchanges, below are the last 24 hours BTC Trading volume for these trusted venues:

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We interpret the increase in CME Futures volume as traditional capital markets players entering the space through these products, whom already have established FCM and exchange relationships, and are more comfortable using the CME Bitcoin Futures product versus the spot market for their various reasons.

To try and answer some of the questions we received regarding yesterday’s piece, the open interest in CME BTC Futures is about a third of the daily volume. Therefore, the futures market is likely not being used by position traders to go either long or short BTC. More likely, the participants are day traders, short-term hedgers or arbitrages. The shape of the futures curve is inconsistent with the borrow/lend rates so participants within that market do not seem to be using futures spreads to gain extra edge. Because of this ‘inefficiency’, we believe the CME Futures volumes and OI should grow over time as participates within the borrowlend space capitalize on these potential opportunities.

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