Source: Cointelegraph Original: "{title}"
The Solana futures (SOL) on the Chicago Mercantile Exchange (CME) launched on March 17, with a first-day trading volume of $12.1 million, which pales in comparison to the debut trading volumes of Bitcoin (BTC) and Ethereum (ETH) on CME.
A comparison of CME cryptocurrency futures by Vetle Lunde. Source: X.com
Vetle Lunde, the research director at K33 Research, compared the trading performance of Bitcoin, Ethereum, and Solana on their first day of trading on CME futures. It is clear that Solana's futures trading volume and open interest on CME are significantly lower than its competitors.
However, Lunde pointed out that when evaluating based on the ratio of trading volume to market capitalization (i.e., normalized trading volume), Solana's debut performance is "closer to the other two."
Is Solana's launch on CME a failure?
In the current bull market, the approval of spot exchange-traded funds (ETFs) and the launch of CME futures contracts have been boosting investor sentiment and driving the development of various cryptocurrencies. By comparing the normalized trading volumes of Bitcoin, Ethereum, and Solana on their first day of CME futures trading, adjusted for market capitalization differences, a fairer comparative analysis can be achieved.
Normalized trading volume measures trading activity relative to the market capitalization of a cryptocurrency, providing a transparent assessment standard for different cryptocurrencies. This metric is valuable as it allows insight into the level of institutional investor participation in the market capitalization of a particular cryptocurrency.
Comparison of normalized trading volumes. Source: Cointelegraph
As shown in the above chart, Bitcoin has the highest normalized trading volume at 0.0319%, while Ethereum and Solana lag behind at 0.0173% and 0.0166%, respectively. A higher normalized trading volume indicates greater investor interest per unit of market capitalization for Bitcoin.
Additionally, the normalized trading volumes of Ethereum and Solana are similar (both around 0.017%), indicating that despite the more than $20 million difference in trading volume on CME's futures debut, Solana's trading activity scale is comparable to that of Ethereum.
Will Solana's futures performance on CME follow in the footsteps of Ethereum or Bitcoin?
After Bitcoin launched on CME futures on December 18, 2017, its price dropped by 26%, falling from $19,000 to $14,000 by December 31, 2017. This pullback continued into 2018, marking the beginning of a collective bear market for cryptocurrencies.
Bitcoin, Ethereum, and Solana's launch on CME and their price reactions. Source: Cointelegraph/TradingView
On February 8, 2021, 93 days after Ethereum launched on CME futures, the price of Ether rose by 150%, reaching an all-time high of $4,384. After hitting this all-time high, the price saw a significant pullback, but this altcoin surged again by the end of 2021, reaching its current all-time high of $4,867 in November 2021.
Considering the price trends of Bitcoin and Ethereum, Solana's price may not experience a strong upward trend. The lack of price increase following its CME futures launch indicates a lack of investor enthusiasm.
However, in the long run, Solana's appearance on CME increases its opportunities for liquidity and price discovery, as it attracts institutional investor participation. As market conditions improve, and optimistic bullish price expectations and protocol revenue expectations attract trader interest, it may have broader implications in the long run.
Related: Solana futures complete their first trading day on CME
This article does not contain investment advice or recommendations. Every investment and trading action carries risks, and readers should conduct their own research when making decisions.
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