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Who trades bitcoin futures and why?

Author

Listed:
  • Ferko, Alex
  • Moin, Amani
  • Onur, Esen
  • Penick, Michael

Abstract

Using regulatory data with identifiers, we analyze the traders active in the Bit- coin futures (BTC) contracts traded on the Chicago Mercantile Exchange (CME). We find two primary trader types, those who hold almost exclusively BTC (con- centrated traders) and those who hold BTC to diversify a broader futures portfolio (diversified traders). The prevalence of these two types changes over time. We also study how BTC markets are connected to other futures markets through common holdings of BTC traders. Finally, we analyze the micro BTC contract and find that the trader composition is different than that of the full-size contract.

Suggested Citation

  • Ferko, Alex & Moin, Amani & Onur, Esen & Penick, Michael, 2023. "Who trades bitcoin futures and why?," Global Finance Journal, Elsevier, vol. 55(C).
    • Handle: RePEc:eee:glofin:v:55:y:2023:i:c:s1044028322000801
    DOI: 10.1016/j.gfj.2022.100778
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    References listed on IDEAS

    as
    1. Paolo Pagnottoni & Thomas Dimpfl, 2019. "Price discovery on Bitcoin markets," Digital Finance, Springer, vol. 1(1), pages 139-161, November.
    2. Dirk G. Baur & Thomas Dimpfl, 2019. "Price discovery in bitcoin spot or futures?," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 39(7), pages 803-817, July.
    3. Alexander, Carol & Heck, Daniel F., 2020. "Price discovery in Bitcoin: The impact of unregulated markets," Journal of Financial Stability, Elsevier, vol. 50(C).
    4. Igor Makarov & Antoinette Schoar, 2021. "Blockchain Analysis of the Bitcoin Market," NBER Working Papers 29396, National Bureau of Economic Research, Inc.
    5. Corbet, Shaen & Lucey, Brian & Peat, Maurice & Vigne, Samuel, 2018. "Bitcoin Futures—What use are they?," Economics Letters, Elsevier, vol. 172(C), pages 23-27.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Ngene, Geoffrey M. & Wang, Jinghua, 2024. "Arbitrage opportunities and feedback trading in regulated bitcoin futures market: An intraday analysis," International Review of Economics & Finance, Elsevier, vol. 89(PB), pages 743-761.
    2. Shafique Ur Rehman & Touqeer Ahmad & Wu Dash Desheng & Amirhossein Karamoozian, 2024. "Analyzing selected cryptocurrencies spillover effects on global financial indices: Comparing risk measures using conventional and eGARCH-EVT-Copula approaches," Papers 2407.15766, arXiv.org.
    3. Bennett, Donyetta & Mekelburg, Erik & Strauss, Jack & Williams, T.H., 2024. "Unlocking the black box of sentiment and cryptocurrency: What, which, why, when and how?," Global Finance Journal, Elsevier, vol. 60(C).

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    More about this item

    Keywords

    Bitcoin; Bitcoin futures; Cryptocurrency; Concentrated traders; Diversified traders; Micro bitcoin futures;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G19 - Financial Economics - - General Financial Markets - - - Other

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