2Q19 CME Bitcoin Futures Analysis: Growing institutional interest? Not quite

Quick Take

  • Estimated notional value of CFTC regulated bitcoin futures (combined CME and CBOE historical values) has surged more than 270% since 1Q19, vs. a 150% increase in the price of bitcoin
  • Total reportable CFTC bitcoin futures traders is almost half the number of total traders a year ago (due to CBOE unwind), and sits below 50 in total; CME traders hit an all time high last week
  • Currently there are ~4 asset managers/institutions with active positions on the product on a quarterly basis, with hedge-funds, prop-trading shops, and other traders making up the bulk of active traders
  • The concentration of the largest bitcoin futures traders as a percentage of the total open interest notional value doesn’t paint a better picture. In fact, this past week the top four largest short traders made up 75% of the total outstanding notional value, an all-time high.
  • In 2Q19 hedge funds have been relatively net neutral, while asset managers and non-reportable traders have skewed heavily long (>80%); meanwhile, Other traders have been largely net short ( >70%)

According to CME Group, its bitcoin futures product cracked yet another all-time record in both volumes and open interest, with more than $1.7 billion in notional value traded on Friday, June 26 (surpassing the previous record by more than 30%). While CME Group finished the update with a proclamation that “institutional interest continues to build,” for its bitcoin futures product, weekly CFTC COT report data actually tells a more nuanced story: less institutional interest, and higher concentration of notional value (both long and short) within the largest bitcoin futures traders.