The Future and Institutional Interest in Crypto

Last week, the Cboe avail traders not to renew its futures contracts on bitcoin as a sign that expectations of institutional interest in crypto assets were misplaced.


If a significant venue like the Cboe doesn’t bring their money and legitimacy into the market who would, where is the much-needed liquidity going to come from?


The CME bigger than the Cboe Futures Exchange, and in commoditized markets, size matters. Brokers would sensibly prefer to trade on a platform where they already have connectivity. Also, settlement methods are important, since they determine a position’s profitability.


The removal of this product is dubious to make a noticeable impact on trading strategies. Volumes were low, and since the CME has stated its intention to continue offering its version, those that used the Cboe can relatively easily switch to the more liquid contract.

 

As even a cursory glance at CoinDesk’s headlines will reveal, the shift is happening, in both elusive and clear ways. The technology is progressing, regulators are working hard to figure out the right tactic, and investors of all types are learning and experimenting.


This progress is steady, but it is gradually building the base for an acceleration. To steal a phrase from Hemingway, the involvement of institutional investors in crypto assets will happen “gradually, then suddenly.” As almost all profound changes do.

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