On Thursday (March 14th), Cboe Futures Exchange (CFE), a wholly-owned subsidiary of Cboe Global Markets (“Cboe”), made it clear that it was putting a freeze on the first U.S. Bitcoin futures product—Cboe Bitcoin (USD) Futures (XBT)—until further notice. The question that everyone in the crypto community seems to be asking now is: is this good or bad news for Bitcoin?
On 4 December 2017, Cboe announced that CFE planned to launch trading in this product on 10 December 2017, and that it would be trading on CFE under the ticker symbol “XBT”. We were also told that “XBTSM futures are cash-settled contracts based on Gemini’s auction price for bitcoin, denominated in U.S. dollars.”
This is what Ed Tilly, Chairman and Chief Executive Officer of Cboe Global Markets, had to say at the time:
“Given the unprecedented interest in bitcoin, it's vital we provide clients the trading tools to help them express their views and hedge their exposure. We are committed to encouraging fairness and liquidity in the bitcoin market. To promote this, we will initially offer XBT futures trading for free.”
Rival CME Group (“CME”) launched its own competing Bitcoin futures product one week later.
CFE Trade Desk’s Product Update Notice
On Thursday (March 14th), the CFE Trade Desk issued a disturbing product update notice that said:
“CFE is not adding a Cboe Bitcoin (USD) (“XBT”) futures contract for trading in March 2019. CFE is assessing
its approach with respect to how it plans to continue to offer digital asset derivatives for trading. While it
considers its next steps, CFE does not currently intend to list additional XBT futures contracts for trading.
Currently listed XBT futures contracts remain available for trading.”
In the table below (“Cboe XBT Bitcoin Futures Trading Data”), we see the XBT futures contracts that “remain available for trading,” and as you can see, the last one (“XBTM19”) is set to expire on 19 June 2019:
Why Would CFE Want to Delist Bitcoin (At Least, Temporarily)?
There are the most likely possible explanations (in order of decreasing likelihood of being correct):
- As TradeBlock, a New York-based crypto-focused research boutique, explained in a research report it published last month, in 2018, “Cboe lost significant market share to the CME.” The theory here is that Cboe was getting way outplayed by its main U.S. rival CME, and so decided to cut its losses and get out of the Bitcoin futures market (which it had a very tiny share of), thereby saving itself further embarrassment.
- As Forbes reported earlier this week, “the 30-day historical volatility of the BTC/USD pair fell to its lowest level since November 14” according to “data provided by cryptocurrency prime dealer SFOX.” And, of course, low volatility does not excite players in the futures markets.
- Cboe was sensing a growing lack of interest in Bitcoin, and more specifically Bitcoin futures, due to Bitcoin’s declining price, amongst institutional investors, and so it decided to put things on pause, and to possibly get back into the market if/when we have a bull market again.
Is This Good News or Bad News?
There are mixed opinions on this in Crypto Twitter. Here are a few examples:
Simply put, the costs of continuance outweigh the benefits in $$$ terms. My sentiments: good riddance. All bitcoin futures should be settled physically so the insider power money cheaters find it more risky and expensive to play futures off spot and vice versa.
— Robin H. Justice (@RobinHJustice) March 15, 2019
Seems the CBOE will stop offering bitcoin futures next June. Quite unfortunate.
— Alex Krüger (@krugermacro) March 14, 2019
They honestly FOMO-ed into the market. By the time that demographic had sparked an interest to get involved in bitcoin the top was in. The insane runs were on the final stretch. They missed it. Now we're down in the dead-zone, low volatility, etc… They'll come back around 10k
— Stackin' ฿its (@StackinBits) March 14, 2019
— RektCastle (@DreamCrypto) March 14, 2019
Bearish to me shows institutions have no interest in BTC
— Niall murray (@Niallm941) March 14, 2019
I see this as a potential good sign of a bottom! Historically insitutions (Banks) entering and existing an asset class (mostly happened in commodities through 90s, 00s) tends to be a decent contrarian indicator
— cryptosapien (@cryptodsapien) March 14, 2019
why is it bad?? people betting on btc price going up and down and not actually buying phsysical btc does nothing for the price.. all the price has done since futures arrived is go down
— fathead (@fathead___) March 15, 2019
Effect on the Bitcoin Price
The fact that Cboe was a relatively insignificant player in the worldwide Bitcoin futures market means that yesterday’s news has not hurt Bitcoin as far as price is concerned. Currently (10:28 UTC on March 15th), according to CryptoCompare, Bitcoin is currently trading at $3,889, up 0.34% in the past 24-hour period: