CME Group, one of the few companies that own a regulated crypto exchange, has indicated that institutional interest in Bitcoin futures is set to grow in the near future. The lack of interest during the initial launch of Bakkt should pose no problem, and the company hopes that its new options for futures contracts in early 2020 will complement the exchange.
In an interview with ‘MarketsMedia’, an institutional trading and investing news platform, the global head of equity index and alternative investment products at the CME Group Tim McCourt stated that the construction of a new market around the radically different digital asset will take time. Tim McCourt also added that institutional interest in Bitcoin will continue to grow and that it will take time for investors to become familiar with the crypto market and to receive approvals for utilizing new products.
The statements come after a sudden announcement from the CME Group, which plans to add new options for its Bitcoin futures contracts in the first quarter of 2020. However, the date is uncertain as the new options still do not have the required regulatory approval.
At the record high of the Bitcoin golden bull run in 2017, the CME Group launched its first Bitcoin futures market. Facing a similar fate as Bakkt, the platform did not reach significant institutional interest as some have believed. A part of the crypto community believes that the introduction of the platform resulted in the market crash, which pushed Bitcoin down to a bottom of $3,200 from its record-high of $20,000.
However, the situation changed at their platform reached a valuable level of adoption. Since introducing the platform, it reached 20 successful expiration settlements in which 3,300 institutional traders participated. The Group now claims that in 2019, the platform exchanged 35,000 BTC every single day. However, the problem persists that the Bitcoins are not physically settled, meaning that no coins are traded between users with the contracts. The same mechanism is applied for the future options in 2020.
According to McCourt, the CME Group will introduce options as a result of customer demand. He stated that investors have sought for options since the initial launch of the platform in December 2017. Commenting on the current state of institutional interest, McCourt said that it is influenced by CTAs, asset managers, and hedge funds.
CME Group shares the same view as Bakkt CEO
CME Group’s stance on institutional interest is similar to the one of the CEO of Bakkt, Kelly Loeffler, who noted that the lack of significant interest at the initial launch is natural and that real interest and adoption will come after the platform is not a brand-new thing in the market.
Loeffler added that several aspects such as regulatory clarity, price discovery mechanisms for Bitcoin, and other factors will contribute to Bitcoin receiving institutional trust. Accordingly, she stated that ‘operations, cybersecurity, and end-to-end regulation’ will result in investor confidence, which will cause Bakkt to thrive.