CME Digital Assets Are Here To Stay

  • The CME Bitcoin futures market has skyrocketed due to increased demand and new players entering the field.
  • Ria Bhutoria, director at Fidelity Digital Assets, has indicated that there has been a jump in the percentage of investors.
  • However, there have been major concerns about the nature of such assets as its price volatility is vulnerable.

Institutional players in the fintech world have stepped up their game even after receiving rave reviews from halving of Bitcoin in 2020. The CME Bitcoin market has skyrocketed due to increased demand and new players entering the field.

Growing Proclivity Towards Bitcoin Futures

The futures market for CME looks bright as open interest for the same has reached 310% this year itself. The growth of this index is sensational because experts are wary of the fact that it might reach to the levels of BitMEX, which is the market leader in derivatives. 

It is a small market that financial institutions have tapped in recent times. The open interest in the market has risen about $10-20 million in the past two months, according to Ecoinometrics. The worth of these transactions is approximately $300 million, and research conducted stated that 80% of the investors have found this asset class appealing.

Ria Bhutoria, director at Fidelity Digital Assets, has indicated that there has been a jump in the percentage of investors who allocated their funds in such digital assets. The number has increased by 5% to 27% in the last year itself. 

Recent Trends in The CME Asset Class

However, there have been major concerns about the nature of such assets as its price volatility is vulnerable. It lacks diversification benefits and does not generate cash flows for them. On the contrary, some firms are buying more Bitcoins than that are mined, e.g., Digital Currency Group. They have seen demand like no other digital asset as the cryptocurrency itself will touch $20,000 by the end of this year.

Bhutoria has raised concerns over the central bank’s monetary policy, which is creating a sense of panic among investors. Their exposure to the market is varying, as the gap between currency and its futures is increasing. CME groups bitcoin futures is a classic example of indirect exposure to digital assets. There has been a fourfold increase in its futures price over the last 365 days. It is on the path to topple its market leader Deribit, very soon, as all research reports are in favor of CME’s digital assets.

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