CME Crypto Contracts Benefit from Volatility

Volatility Return

CME Group’s monthly futures volumes in bitcoin and ether contracts saw a spike in volume in May, signaling an increase in speculative activity, according to digital asset data provider CryptoCompare.

Bitcoin futures contract volume on CME was 250,650 contracts, the highest since February 2021 according to CryptoCompare. May 2022 Exchange Review. The exchange’s ether futures also hit record volume with 136,165 contracts traded in May, up 63% from April.

Bitcoin options on CME also saw a spike in volume in May, surging 161% to 3,794 contracts.

“However, the average open interest figures for bitcoin and ether fell by 25.6% and 29% respectively,” added CryptoCompare. “This could be the result of investors and traders closing their positions as more uncertainty looms for the sector.”

In terms of total US dollar trading volume, ether, bitcoin and CME futures all hit a total of 52,900 million dollars, 20.5% more than in April.

Source: CryptoCompare

TerraUSD and Celsius

Cryptocurrency prices fell in May following the collapse of algorithmic stablecoin TerraUSD and increased volatility led to spot volumes on centralized exchanges rising 13.6% to $1.9 trillion. CryptoCompare noted that a high of $148.8 billion was traded on May 11, the day TerraUSD crashed.

On June 13 there was another crack in the decentralized finance (DeFi) sector when the Celsius network said that all withdrawals, trades and transfers would stop due to extreme conditions. market conditions.

Rob Henderson, an analyst at analytics provider Novum Insights, said in a blog post: “Network users have raised concerns about similarities to the Terra crash a few weeks ago.”

Henderson continued that the protocol reloaded its collateral to prevent it from triggering the automatic liquidation process that would have caused a massive asset sell-off and had a catastrophic effect on the markets.

“This strategy will not work forever as the root of the protocol problem lies in the plummeting crypto markets,” Henderson said. “In some ways this could be seen as an irresponsible move as the protocol has effectively spent its remaining solvency in a bit of overtime in the hope that the markets will recover.”

More protocols could face a similar decision and Henderson said the optimistic outlook is that this offers an excellent opportunity for the strongest DeFi and blockchain protocols to acquire assets at extremely low prices.

“The widespread adoption of NFTs and the floods of institutional investment entering the space during the heights of Q4 2021 have shown that the crypto industry is capable of reaching such heights even if they were (so far) short-lived,” Henderson added. “Space veterans will be less concerned about current valuations than newbies, as they have been on this roller coaster before. And only those who buckle up for the falls can enjoy the views from the top.”

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