Importance of Bitcoin futures has been ignored says, JP Morgan
Bitcoin futures are becoming popular and its trading now becoming legal as regulators have started paying attention to it. The number of exchanges has started offering Bitcoin futures contracts and even started indices that keep the investors and individual up with real-time Bitcoin price, traded volume and much more. Recently, one of the largest investment bank JP Morgan Chase & Co. said that ‘Bitcoin futures may be more important than many in the market appreciate.’ Cryptocurrency asset manager Bitwise and the Blockchain Transparency Institute indicate have also published several types of research and figures related to an increased importance of Bitcoin future trading.
The reports indicate that only five percent of the total Bitcoin future trading is authentic. The total Bitcoin Future trading volume in May is around $720 billion which means if only 5% of that the actual volume of Bitcoin trading on cryptocurrency exchanges in the month was around $36 billion. The data was published by JPMorgan strategists led by Nikolaos Panigirtzoglou who used data from Coinmarketcap.com. Chicago exchange company Cboe Global Markets and CME Group have recorded combine Bitcoin future trading volume of $12 billion which according to JP Morgan ‘jump from April’s $5.5 billion and a first-quarter 2019 monthly average of $1.8 billion.’
A major implication of this is that “the importance of the listed futures market has been significantly understated,” Panigirtzoglou wrote. “The report by Bitwise credits the traded futures as an important development in allowing short exposures that enabled arbitrageurs in properly engaging in arbitrage, and that the futures share of spot Bitcoin volumes increased sharply in April/May.”
Crypto asset manager Bitwise, in March, filed report U.S. SEC/security exchange and commission that some exchanges inflate their trading volumes to appear higher in rankings, which can attract more users and generate fees. One of the biggest cryptocurrency market data aggregators said that at the time that concerns over inaccuracies “are valid.”
“The overstatement of trading volumes by cryptocurrency exchanges, and by implication the understatement of the importance of listed futures, suggests that market structure has likely changed considerably since the previous spike in Bitcoin prices in end-2017 with a greater influence from institutional investors,” JPMorgan said. It is clear that the market structure ‘has likely changed considerably’ and Futures share of volumes is up sharply also that clearly indicate the importance of Bitcoin futures.