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Will Crypto Trading Fuel CME Group’s Balance Sheet?—What to Expect for Q3 Earnings

Will Crypto Trading Fuel CME Group’s Balance Sheet?—What to Expect for Q3 Earnings

CCNCCN2024/10/08 02:00
By:CCN

Key Takeaways

  • CME Group has consistently exceeded earnings estimates, indicating strong financial performance.
  • Analysts expect continued earnings growth in the coming years, driven by increasing trading volumes and product innovation.
  • CME’s launch of Bitcoin Friday Futures (BFF) has been a major success, attracting significant interest from investors.

Exchange operator CME Group is expected to report robust financial results for the third quarter on Oct. 23 , exceeding analyst expectations on earnings and revenue.

The company’s strong performance is driven by a combination of factors, including its leadership in the cryptocurrency derivatives market and its ability to capitalize on growing demand for its products.

CME Group Q3 Expectations

CME Group’s third-quarter earnings estimate is $2.56 per share, with a forecast range of $2.30 to $2.75. The company posted an EPS of $2.56 in the second quarter, beating the average estimate by 2.0%. Over the past 12 months, CME has exceeded its EPS estimates every time, compared to the industry average of 63%. In the last year, CME has outperformed its industry in earnings.

Analysts expect CME Group’s earnings to grow in the third quarter. l Credit: TipRanks

Sales estimates for the third quarter are $1.55 billion, ranging from $1.42 billion to $1.65 billion. In the second quarter, sales reached $1.53 billion. In the past year, CME surpassed sales expectations 50% of the time, while the industry achieved an 81% rate.

CME Group has always posted higher-than-expected revenue over the most recent quarters. l Credit: TipRanks

For 2024, analysts expect CME’s EPS to rise 7.5% to $10.04 from $9.34 in 2023. However, experts see a slight decline to $9.97 in 2025.

According to 14 Wall Street analysts , the average price target for CME in the next 12 months is $219.14.

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This target represents the average between a high expectation of $275.00 and a low one of $180.00. It represents a decrease of 2.4% from the last price of $224.43.

BFF Launch “Huge Success”

CME Group’s newly launched Bitcoin Friday Futures (BFF) have garnered significant interest from institutional and retail investors. Their smaller contract size and weekly expiry make them more accessible to a broader range of traders.

Over 31,000 BFF contracts were traded in just one day, marking CME’s most successful crypto futures launch. This impressive start underscores the increasing demand for regulated crypto products and the appeal of CME’s innovative offerings.

The smaller one-fiftieth of a Bitcoin contract has made BFF futures particularly attractive to retail investors. Meanwhile, the weekly expiry allows contracts to closely mirror spot prices, helping traders manage weekend price volatility.

Additionally, these futures are cash-settled based on the CME CF Bitcoin Reference Rate New York Variant (BRRNY), ensuring transparency and reliability in settlements.

The success of Bitcoin Friday Futures reflects the growing appetite for regulated crypto derivatives and signals potential growth for the broader crypto market.

It also reaffirms CME Group’s leadership in crypto derivatives, where its future in Bitcoin and Micro Bitcoin continues to see substantial trading volumes and open interest.

Looking ahead, CME is also exploring the possibility of launching spot Bitcoin trading. This would further strengthen its position as a premier platform for crypto trading , offering investors even more opportunities to participate in the Bitcoin market.

Crypto Weight on CME Earnings

Although CME doesn’t say how much cryptocurrency trading contributes to its earnings, the company is at the forefront regarding Bitcoin derivatives. This market continues to gain momentum, with open interest reaching a new peak of 539,530 BTC. This surge, representing a 3.7% daily increase, highlights traders’ growing interest in Bitcoin-based derivatives.

Additionally, CME Group has played a pivotal role in this growth. It captured a substantial market share with 146,150 Bitcoin held in futures open interest contracts.

This represents an all-time high for the exchange and underscores the strong demand for its Bitcoin derivatives products.

Total BTC futures open interest. l Credit: CoinGlass

Michael Harvey, Head of Franchise Trading at Galaxy, said : “The launch of Bitcoin Friday futures by CME Group represents a significant advancement in the broadening of crypto derivatives markets, offering investors a flexible and efficient way to manage their bitcoin exposure. These weekly contracts closely track spot prices, providing a valuable tool for growing liquidity and optimizing trading strategies for traders of all types and sizes.”

“As we continue to bridge the gap between traditional finance and the digital asset space , initiatives like this reinforce our commitment to empowering clients with the best solutions to manage their bitcoin exposure in a transparent market,” Harvey added.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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