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Institutional interest heats up as prices cool off

Volatility in the cryptocurrency market returned briefly halfway through Q3 with the price of bitcoin and ether falling from their previous annual highs. After two consecutive quarters of rising prices, Q3 saw the prices of the two leading cryptocurrencies by market cap, bitcoin and ether, drop 12% and 15%, respectively. Even with these declines, bitcoin’s price has increased 62% YTD while ether’s price has gained 39%.

While volatility and prices have remained mostly range bound along with trading volumes this year, CME Group continues to see increases in open interest (OI) across the Cryptocurrency suite. Options have seen a sharper increase in both volume and open interest whereas Bitcoin and Ether futures open interest continues to develop. Market participants view CME Group as a trusted source for around-the-clock risk management demonstrated by gains in open interest.

Q3 records

Capture relative value with Ether/Bitcoin Ratio futures

Ether/Bitcoin Ratio futures launched July 31, enabling traders to efficiently capture the relative value between Ether and Bitcoin futures in a single transaction. The new contract is cash-settled based on the settlement prices of the corresponding futures contracts. Ether/Bitcoin Ratio futures can help market participants access ether-bitcoin exposure without the need to take a directional view.

New weekly options offer more precision and new trading opportunities

Enjoy greater precision and versatility in managing short-term bitcoin and ether risk with the expansion of weekly options expiries across our Cryptocurrency options suite. Nearly 900 new Bitcoin and Ether options on futures and 13.5K Micro Bitcoin and Micro Ether options contracts have traded since the expansion in May.

  • 10 new weekly options on Bitcoin futures and Ether futures: 
    • Monday, Tuesday, Wednesday, Thursday, and Friday options on Bitcoin futures 
    • Monday, Tuesday, Wednesday, Thursday, and Friday options on Ether futures 
  • Four new weekly options on Micro Bitcoin futures and Micro Ether futures:  
    • Tuesday and Thursday options on Micro Bitcoin futures
    • Tuesday and Thursday options on Micro Ether futures   

These new contracts complement our existing monthly and quarterly Cryptocurrency options

Reduced fees on Micro Bitcoin and Micro Ether contracts

Delivering deeper liquidity, greater capital efficiency, and now lower fees. View the fee schedule for details, including member exchange discounts.

  • Futures (through January 31, 2024):
    • MBT futures non-member exchange fees are reduced from $2.50 to $1.00 per contract.
    • MET futures non-member exchange fees are reduced from $0.20 to $0.10 per contract.
  • Options (through January 31, 2024):
    • Exchange trading fees are reduced by 50% per contract

OpenMarkets: Three driving forces behind the ether-bitcoin exchange rate

Several factors appear to influence movements in ether relative to bitcoin. CME Group Senior Economist Erik Norland explains the macroeconomic factors and drivers.

Mitigate settle price risk on Bitcoin futures and Micro Bitcoin futures

Trading at Settlement (TAS) functionality allows market participants to enter a trade at a spread to the yet-to-be-determined daily settlement price of the Bitcoin and Micro Bitcoin futures contracts calculated at 4:00 p.m. Eastern time. TAS enables clients to transact at or near the futures settlement price, making it particularly useful when replicating an index and complements our Basis Trade at Index Close (BTIC) mechanism.

Event contracts on Bitcoin futures: a new way to trade BTC is here

Discover a new way to gain exposure to Bitcoin futures price movement with event contracts on Bitcoin futures. These limited-risk, cash-settled, daily expiring contracts on Bitcoin futures complement our suite of 10 events contracts tied to benchmarks futures markets.  Over 54K Bitcoin event contracts have traded since launch. Cash-Settlement Fees are waived through the end of April 2024, find out more here.

Cryptocurrency trading highlights: Ether options trading gains ground in Q3

Q3 Volume and Open Interest
Cryptocurrency futures and options
ADV: 28.4K contracts
Open interest: 83.2K contracts

Futures Product 

Q3-2023 ADV

BTC 10.2K
ETH 3.8K
MBT 7.3K
MET 5.2K

Bitcoin futures (BTC) institutional interest continued to increase throughout the quarter as investors sought regulated venues and products to hedge market volatility and manage exposure. Q3 2023 average daily volume (ADV) was nearly 10.2K contracts and open interest averaged 15.8K contracts. The number of LOIHs averaged 109 in Q3 2023. Bitcoin Options have traded over 152K contracts since launch.

Ether futures (ETH) Nearly 3.4M contracts (170M equivalent ether) have traded since launch just over two years ago. LOIHs averaged 63 throughout the quarter. Options on Ether futures reached a record 672 options traded on August 18 and open interest reached a record 4.5K on September 29.

Micro Bitcoin (MBT) and Micro Ether futures (MET) provide precise, cost-effective tools to manage cryptocurrency risk. Micro Bitcoin and Micro Ether futures Q3 2023 ADV was a combined 12.5K, while OI averaged 25k contracts. Since their respective launches, over 9.1M MBT contracts have traded and over 6.6M MET contracts have traded. Micro Bitcoin and Micro Ether options offer additional flexibility and granularity to manage risk, over 704K contracts have since launch.

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All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.

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