CME Flags Bitcoin Growth as Cboe Pulls the Plug

Cboe appears to have conceded defeat on bitcoin futures to cross town rival CME Group with an announcement that it will delist its contract this month.

In a release listing new product information, the exchange says its CFE subsidiary, which supported bitcoin trading “is not adding a Cboe Bitcoin (USD) (“XBT”) futures contract for trading in March 2019”.

Cboe adds that CFE is “assessing its approach with respect to how it plans to continue to offer digital asset derivatives for trading”, continuing that “while it considers its next steps, CFE does not currently intend to list additional XBT futures contracts for trading.” 

Currently listed bitcoin futures contracts remain available for trading, the exchange group says.

Meanwhile CME Group reports a new peak in volume trading in its own bitcoin contract with 18,338 contracts or 91,690 equivalent bitcoin ($360 million) traded. The merc says that average daily volume in the contract was 4,784 contracts, around $90 million in notional terms, or 24,000 bitcoins. Open Interest on CME rose 19% to the end of February and was over 4,000, this compares to the average for Q4 2018.

The two exchanges launched bitcoin contracts within a week of each other in December 2017, however CME’s contract was worth five bitcoin and Cboe’s one. Equally, CME’s contract was settled according to an aggregated price from several spot venues, while Cboe’s contract settles via an auction on Gemini Exchange.

While there was early optimism from both exchanges, volumes have not soared dramatically and the tumble in bitcoin’s price from near $20,000 the week of the launches, to under $4,000 in recent months was widely seen as dampening interest in the contract – especially when markets stalled under $4,000 and volatility slumped.

Both exchanges were hoping to tap into the expected surge in demand for crypto assets from the institutional space, however this has not yet emerged.

“I was surprised that [Cboe] is pulling out,” a source at one asset management firm focused on digital assets tells Profit & Loss. “I remember speaking to some of their team a couple of months ago and it seemed like [crypto] was a big, big strategy for them, it wasn’t just a product that they were listing to see if it worked.”

However, they add: “I guess they were just getting blown out of the water by CME though. It was consistently going in the wrong direction for them, judging from the public numbers.”

Colin Lambert

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