Traders at the Chicago Mercantile Exchange (CME) are increasingly turning to Bitcoin futures as the market anticipates a decision by the Securities and Exchange Commission (SEC) on the approval of a spot Bitcoin exchange-traded fund (ETF), expected in early January. This anticipation has led to a significant rise in trading volume and open interest for Bitcoin futures on the exchange.
CME's head of cryptocurrency products Giovanni Vicioso highlighted that traders are using futures contracts to hedge against the potential outcomes of the SEC's decision. This strategic move is evident in the mixed trading sentiments observed today, where some traders are taking short positions while others are betting on a positive decision from the SEC.
The growing interest in Bitcoin futures is reflected in the trading volume on CME, which saw a nearly 13% increase in November compared to October. This surge is viewed as an indicator of heightened institutional engagement in the cryptocurrency derivatives market. Analysts now estimate a 90% likelihood of the SEC simultaneously approving spot Bitcoin ETFs, a departure from their historical pattern of rejections based on physical asset requirements for such products.
Last week, a record high open interest in Bitcoin futures was observed, with Deribit recording $481 million, which then rose to $616 million within a few days. Bloomberg forecasts a potential approval window in early January, which could lead to a significant market response.
As the market anticipates the SEC's decision, products like the ProShares BITO Fund have gained popularity among traders who prefer to speculate on future prices without engaging in direct asset transactions. These derivative contracts serve as a tool for hedging against specific events, such as regulatory decisions and the Bitcoin halving cycle.
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