Demand for Bitcoin futures has eased following the US debut of exchange-traded funds that directly hold the largest digital asset, an initial indication of how the products can impact crypto trading trends.
Outstanding contracts — or open interest — for CME Group Bitcoin futures dropped some 24% to 20,679 by Jan. 30 after the 10 spot ETFs began trading three weeks ago, data compiled by Bloomberg show. Open interest had been at a record in the wake of Bitcoin’s 157% surge last year in anticipation of the ETFs.
CME derivatives gained popularity in part because they offer a regulated venue for Bitcoin exposure, a role the spot ETFs can now fill too. The futures were also used in a key arbitrage play involving the $21 billion Grayscale Bitcoin Trust, or GBTC, but that trade has run its course, crypto asset manager DACM said.
Investors switching to the US ETFs, and Bitcoin’s cooling rally, might lead to some “reduction in activity” in CME Bitcoin futures but they remain highly liquid linchpins of the crypto market, said Vetle Lunde, a senior analyst at K33 Research. He flagged their potential role as a hedging tool for the authorized participants managing the creation and redemption of the ETF units.
