How Solana and XRP Futures Became CME’s Fastest Growing Crypto Products

According to Giovanni Vicioso, global head of crypto products at CME Group, Solana and XRP were able to move because of the movement in Bitcoin and Ethereum.

The world’s leading derivatives market began offering small-scale crypto futures contracts earlier this year, benefiting from infrastructure and liquidity that it didn’t have before, Visioso said. decryption on wednesday.

“These products are definitely our fastest growing products,” he said. “Solana and XRP had what you would call an ‘acceleration advantage’ because they were able to benefit from the lessons seen in the market with the launch of Bitcoin and Ethereum.”

On Monday, CME products related to Solana and XRP reached record open interest, with about $3 billion worth of contracts outstanding, a spokesperson said. decryption. These contracts allow market participants to manage risk and speculate on future price movements.

Futures are a common tool for financial institutions, but retail investors are participating in the market as well, creating a broader base, Visioso said. Solana futures appeared on CME’s market in March, and XRP futures began trading in May.

Solana and XRP futures reached $1 billion in nominal open interest on the same day in August. XRP futures briefly surpassed that level, while Solana futures’ notional open interest doubled over the next 18 days, Vicioso noted.

“We’ve never really seen this before,” he said, adding that Solana futures trading volume averaged nearly $700 million a day in notional value in October.

When CME first offered Bitcoin futures contracts in 2017, Vicioso said the company was establishing a foundation for a market that didn’t have the same regulatory background as it does today. There were also no exchange-traded products related to Bitcoin, he said.

Regulatory clarity has allowed more market participants to participate in the U.S., while ETFs have allowed investors to pursue popular strategies such as so-called basis trading, which takes advantage of small differences between an asset’s spot price and its future price, he explained.

“You can see that the same strategy that they have applied to Bitcoin and Ethereum is now being applied to Solana and XRP,” Bicioso said. “Some market participants are trying to engage in these arbitrage and relative value trades.”

Bitwise Asset Management’s Spot Solana ETF debuted Rex stock and Osprey fund on Tuesday. announced A similar product will be available for XRP in September. Vicioso pointed out that people can still participate in basis trading by owning cryptocurrencies in traditional form.

“What we noticed is that the fundamentals of both Solana and XRP are quite rich compared to Bitcoin and Ethereum,” he said. “That’s also a source of volume.”

The debut of Solana and XRP futures-based ETFs this spring was also a positive factor, creating a complementary market for CME’s products, Bisioso said.

“Futures liquidity creates ETF volume and vice versa,” he said. “You received benefits that you never had the opportunity to enjoy with either Bitcoin or Ethereum.”

Meanwhile, this month’s crypto crash has led to a “flight to quality among institutional investors,” with $19 billion worth of leveraged positions being liquidated, Visioso added. He said the episode showed the value of market protection measures.

“The core differentiator is regulation, so to speak,” he says. “In terms of customer protection, there’s a waterfall that you don’t necessarily see on some of the unregulated platforms.”