Lumber prices drop 35% since crypto exchanges began trading it
The price of lumber has fallen 35% since crypto exchanges first listed tokenized lumber contracts for trading in May 2021.
At the time, using blockchain—a digital ledger that records transactions across many computers—to tokenize and trade real-world commodities like lumber was seen as a promising innovation. Lumber prices had been rising during the COVID-19 housing boom due to high demand for home renovations and supply chain disruptions.
FTX launched its lumber futures contract on May 6, 2021. Since then, lumber prices have dropped 34.9% in USD terms, according to the Bureau of Labor Statistics’ seasonally-adjusted lumber index, which peaked at 455.4 in May 2021 and fell to 296.4 by July 2026.
Early trading activity
Protos reported that roughly $23 million in lumber trading occurred on FTX during the first several days after launch.
Challenges with lumber as a tradable asset
Lumber is a broad category with thousands of different prices based on type, quality, and location. Cash prices vary by species, grade, dimensions, and delivery point. This complexity makes it difficult to standardize as a tradable asset.
The Chicago Mercantile Exchange (CME) changed its lumber futures contract in August 2022, reducing the contract size from 110,000 board feet to 27,500 board feet and changing the delivery location to Chicago. The old contract was delisted in May 2023 after a transition period.
What is confirmed
- FTX launched tokenized lumber futures on May 6, 2021.
- Lumber prices have declined 34.9% since then, based on the Bureau of Labor Statistics index.
- Early trading volume on FTX reached approximately $23 million in the first few days.
- CME updated its lumber futures contract specifications in 2022 and delisted the old contract in 2023.
Why it matters
The decline in lumber prices since crypto exchanges began trading it highlights the challenges of tokenizing real-world assets. Despite initial enthusiasm, the complexity of pricing and trading physical commodities like lumber has not translated into sustained market success.
