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Bitcoin futures trading continues to grow since both the CME and Cboe launched their futures contracts in late 2017. Experts believe that the reduced volatility, as well as clearer regulations, make the market more appealing to mainstream investors.

Bitcoin Futures Trading Continues to Grow

Market analysts say Bitcoin futures trading continues to be popular among mainstream investors. Commenting on the steady growth, Tim McCourt, the head of equity products and alternative investments at CME said:

We see continued growth both in terms of the average daily volume and open interest. The volume has steadily increased compared to when it was first launched in December. This is not a one-sided product because we have both supply and demand. Customer demand is strong because the relationship between the futures and cash market have a tight basis spread.

Reports from CME show that there was a massive spike in Bitcoin futures trading on July 5, 2018, with 6,739 contracts. This figure is significantly higher than the daily average of 2,800 contracts. Mati Greenspan of eToro said that the spike was a misnomer given that there wasn’t any corresponding surge in Bitcoin’s price during the same period.

Less Volatility and Better Organization

Bitcoin, like many other cryptocurrencies, is prone to wild price swings. Thus, spot trading does come with the added hazard of realizing spectacular losses if the price trajectory follows an unfavorable path. Many experts believe that Bitcoin futures contracts offer a path to the asset without the issue of volatility.

Commenting on this observation, Andrew Wilkinson, the chief market analyst at Interactive Brokers Group said:

Compared to the spot market, the bitcoin futures market has less volatility and is slightly more organized. The luxury of the futures market is that you can take advantage of price movements and there is better price transparency.

However, Bitcoin futures trading also has its downside. According to Wilkinson, the lack of liquidity and enthusiasm are prominent issues in the market. Wilkinson also identified the inability of investors - click here to read the rest of this article