CME Traders Engage in Dual Bets for Potential Approval of Spot Bitcoin ETF

Crypto Derivatives Trading Soars on CME

The excitement surrounding the potential approval of a spot Bitcoin ETF by the SEC has led to a surge in crypto derivatives trading on the Chicago Mercantile Exchange (CME). Traders are actively buying Bitcoin futures contracts, both to bet on ETF approval and to hedge against the risk of rejection.

All-Time High Open Interest on CME

According to a recent report, the CME has experienced record-breaking open interest (OI) levels. OI is a measure of the number of unsettled contracts. Meanwhile, BTC futures OI on platforms like Deribit has also seen a significant increase.

Hedging Against Uncertainty

Giovanni Vicioso, global head of cryptocurrency products at CME, highlights that many traders are using futures contracts to short BTC due to the uncertainty surrounding ETF approvals. These contracts allow speculators to bet on future asset prices without directly buying or selling the asset itself.

Rising Volume Indicates Institutional Involvement

The volume of Bitcoin futures trading on the CME has risen by 13% in November compared to October. Vicioso sees this as a clear sign that institutions are entering the crypto space and exploring trading opportunities.

Predictions for January Approval

Bloomberg ETF analyst James Seyffart predicts that there is a high chance of spot Bitcoin ETF approval between January 5th and 10th, 2024. This prediction aligns with increasing confidence among experts who believe that multiple spot ETFs will be approved simultaneously.

Hot Take: Increased Derivatives Trading Reflects Growing Optimism for Bitcoin ETF Approval

The recent surge in crypto derivatives trading on platforms like CME indicates the growing optimism surrounding the potential approval of a spot Bitcoin ETF by the SEC. Traders are actively using futures contracts to both speculate on ETF approval and hedge against the risk of rejection. The record-breaking open interest on CME and the rising trading volume demonstrate institutional involvement in the crypto market. Analysts predict a high probability of spot ETF approval in early January, further fueling excitement among traders and investors.