On March 17, Solana futures (SOL) launched on the Chicago Mercantile Exchange (CME), achieving a trading volume of $12.1 million on its first day. This figure was notably lower compared to the initial trading volumes of Bitcoin (BTC) and Ethereum (ETH) futures on the CME.
Comparison of CME crypto futures highlighted by Vetle Lunde.
In a recent analysis, Vetle Lunde, Head of Research at K33Research, examined the trading performance of BTC, ETH, and SOL futures on their launch days, revealing that SOL’s CME futures volume and open interest fell significantly behind its competitors.
Nevertheless, Lunde noted that when assessing normalized volumes relative to market cap, SOL’s debut is more comparable to the other two.
Was the SOL CME futures introduction underwhelming?
During the ongoing bullish trend, the approval of spot ETFs and the launch of CME futures contracts have generally enhanced investor sentiment, propelling various cryptocurrencies forward. By comparing the normalized trading volumes, adjusted for market cap disparities among BTC, ETH, and SOL on their CME futures debut, a more equitable analysis emerges.
Normalized volume gauges trading activity in relation to a cryptocurrency’s market cap, facilitating a clearer comparison across different assets. This metric is crucial as it reveals institutional interest based on a crypto asset’s market capitalization.
Comparison of normalized volumes.
The data indicates that Bitcoin has the highest normalized volume at 0.0319%, while ETH and SOL lag behind at 0.0173% and 0.0166%, respectively. A higher normalized volume signifies greater investor interest relative to market cap for BTC.
Moreover, the similarity in normalized volumes for ETH and SOL (around 0.017%) suggests that the level of trading activity for Solana aligns closely with that of Ether, despite a more than $20 million discrepancy in trading volume on day one between ETH and SOL futures.
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Will SOL CME futures mirror the performance of ETH or BTC?
After the launch of Bitcoin CME futures on December 18, 2017, BTC experienced a 26% drop, plummeting from $19,000 to $14,000 by December 31, marking the onset of a broader bearish trend in the crypto landscape.
Price reactions post CME launches for Bitcoin, Ethereum, and Solana.
Conversely, Ether’s price soared by 150% to reach a new all-time high of $4,384 just 93 days after the launch of its CME futures on February 8, 2021. However, following this peak, a significant correction occurred before the altcoin rallied again towards the end of 2021, ultimately achieving its all-time high of $4,867 in November 2021.
Given the price movements observed for Bitcoin and ETH, it’s possible that SOL’s price may not see a similarly robust rally. The absence of upward momentum following its CME futures launch hints at a lack of investor enthusiasm.
Nonetheless, from a long-term viewpoint, SOL’s introduction to the CME could enhance liquidity and price discovery for Solana, attracting institutional interest over time. As market conditions improve, favorable projections regarding bullish prices and protocol revenue may further engage traders.
Related: Bitcoin struggles below $85K— Key price levels to monitor ahead of FOMC.
This article does not offer investment advice or recommendations. Every investment and trading decision carries risk, and readers are encouraged to conduct their thorough research before proceeding.