Crypto Derivatives On The CME Reach New Milestones Amid Regulatory Uncertainty

Rubikkav
3 min readMar 8, 2023

QUICK TAKE

  • Futures and options volumes ticked higher again in February for bitcoin and ether.
  • The CME benefited from the FTX collapse, with institutional investors looking towards regulated venues.

Bitcoin and ether derivatives trading volumes in dollar terms continued to climb higher in February.

Futures and options trading volume for bitcoin rose by about 13%, and ether’s volumes rose 2% and 30%, respectively. The increase comes as spot volumes continue to rise amid a hot regulatory backdrop.

Bitcoin futures volume came in at $791 billion across all exchanges last month, up from $697 billion in January and rising for the third month in a row, according to The Block’s data dashboard. Options rose to about $20 billion from $17.7 billion.

High Points

February marked several milestones in crypto derivatives, notably on a regulated platform.

Ether options volume on the CME reached its highest level since inception last year. Options on the exchange went live in August of last year. Volumes increased for two months through October before dropping to close out the year.

Volumes soared in January with the momentum carrying over into February. Commentators speculated that institutional crypto traders were avoiding unregulated or semi-regulated platforms following the collapse of FTX.

The regulatory environment remains hot, said Laura Vidiella, VP of business development at LedgerPrime. “Traders and investors are still waiting for more guidance, so until then, going for a platform that is clearly regulated is the safest bet,” she said.

The move to the CME comes despite traders having to settle for cash settlement over physical settlement. Physical settlement is generally preferred over cash in crypto markets, Vidiella said.

Bitcoin also had a big month, with options open interest reaching an all-time high and crossing $1 billion for the first time. Open interest is the total number of outstanding contracts that are yet to settle.

Rising Tide

Increases in futures trading indicate a heightened risk appetite for speculation in the market, according to 21Shares research analyst Carlos Gonzalez.

“Future volumes are back to where they were before FTX’s collapse,” Gonzalez said. “But they are still far away from the excessive levels seen in the 2021 bull run.”

The volume increase was not limited to the futures market. Gonzalez noted that spot volumes on centralized exchanges in February amounted to $878.4 billion, up 87.75% from December’s $467.86 billion.

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