The bad news about Bitcoin future trading on Cboe

Reports that Bitcoin futures markets would soon open was greeted around the crypto world with joy. The belief was that this development would launch a path for Bitcoin to become mainstream and for more traditional funds to enter the market. However, CBOE's Bitcoin futures market has been somewhat disappointing.

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Many experts had a lot to say about the Bitcoin futures market. The general belief was that financial institutions and hedge funds would flock to the market to buy Bitcoin futures as the crypto-coin is now a hot cake. But the turnout has been below expectation since Chicago Board Options Exchange, Cboe, opened its Bitcoin futures market on December 10.

Good news and bad news

It's not all woes for the futures contract market- it has been successful, in a modest way.

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The volatility is low when compared with previous weeks and the difference between futures and cash contract has reduced to a little over 1.5 % from over 5% about 5 days ago. 

Apart from that, the development has pushed Bitcoin higher than ever. Bitcoin just hit a new all-time high of $19,000 and $20,000 seems to be around the corner. 

But the turnout is low when you look at things holistically. The daily amount of Bitcoin traded on the platform is about $60 million. And considering that about 500,000 Bitcoins (approximately $8.7 billion) are traded globally daily, that number is low.

$60m vs $8.7bn. Considering the current massive interest in Bitcoin, that number is very low. 

Reason for 'low' turnout

There are a number of factors believed to be responsible for this condition. 

Perhaps it is because only a handful of traditional finance institutions could participate in Cboe's Bitcoin futures market. This makes sense. Cboe is based in the United States and most Bitcoin traders don't have an account with them. So it is only reasonable that a little percentage of global Bitcoin transactions take place on the platform. 

Bobby Cho, a Cumberland Mining trader who uses the platform buttresses this point. He explained that "the largest traders of bitcoin are retail players that don't live in the U.S." And also that the biggest Bitcoin miners in the world are not only not based in the U.S., they are also not built to trade financial instruments. They just want to mine Bitcoin.

More players, More liquidity 

This situation won't last for long though, as CME Group has launched its own Bitcoin futures market and  TD Ameritrade, the largest futures operation of any online brokerage firm will offer Bitcoin futures on its platform starting from Monday.

The availability of more Bitcoin futures platforms will see the entrance of more players into the market, creating more liquidity and transparency.

This will also pave the way for Bitcoin to really become mainstream as the debate on its potential and worth rages on. 

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