Ripple’s XRP Just Might Be the Next Big Crypto Futures Market

Bitcoin futures may have been launched with tremendous fanfare – XRP futures, on the other hand, not so much.

But in fact, U.K.-based startup Crypto Facilities has been operating a futures market for the world’s third-largest cryptocurrency, developed by blockchain startup Ripple Inc., for almost 18 months now. And while the company’s CEO, Timo Schlaefer, has been tight-lipped about the product so far, he sees trends in recent data that indicate broader XRP futures adoption may be on the horizon.

“We have pretty good order books,” Schlaefer told CoinDesk, “And we’re in the process of working with some of the large market makers to draw that further.”

Indeed, when bitcoin was still months away from getting its first Commodity and Futures Trading Commission (CFTC) regulated bitcoin derivatives, Schlaefer’s company had quietly partnered with Ripple and launched XRP futures – its second cryptocurrency futures product after bitcoin to be regulated under the UK’s Financial Conduct Authority (FCA).

Later, when Chicago commodities giants Cboe and CME Group opened their first bitcoin futures in December, Crypto Facilities’ own XRP futures were trading $14.2 million in volume a month. And by the time Cboe’s first bitcoin futures contract expired in January, Crypto Facilities’ XRP futures had almost doubled in volume to $24.6 million.

Yet, few outside the firm’s own pool of investors even knew the futures were being traded, much less with that kind of volume. Now, that appears to be changing with the company on track for another positive month, and others exploring the contracts.

“The liquidity has been growing quite a lot,” Schlaefer said, adding:

“We have seen our volume growing through February and expect March to set a new record.”

Mirroring the price

While Schlaefer wouldn’t reveal the identities of the large market makers the company is currently courting, data he provided exclusively to CoinDesk gives a look into how the offering has been growing – and it largely mirrors the price of XRP itself.

For instance, the volume of cash-settled XRP futures, which the company officially launched in October 2016, were relatively flat from month to month until March 2017.

That’s when XRP futures volume more than tripled to $3.08 million and quadrupled to $12.1 million the following month. Over the same time period, the price of XRP experienced similar growth, rising from $0.03 in April to $0.34 in mid-May, before shrinking substantially.

But then again in January 2018, the volume of futures mirrored XRP’s price increases, jumping to $24.6 million as the price of the cryptocurrency reached a record $3.53.

XRP Futures, Crypto Facilities

And according to Schlaefer, while the number of registered investors in XRP futures, between 2,000 and 3,000 people, seems small, he estimates that those investing in the product comprise about 30 percent of Crypto Facilities’ total number of investors…

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