CME Bitcoin Futures Trade $2.3M in Debut


The much-anticipated Bitcoin Futures options from CME Group went live today. On its debut, is saw volumes surpassing $2.3 million during its first day of public trading.

January 14, 2020, | AtoZ Markets –  Options on CME’s Bitcoin futures contracts has been launched on January 13. Each of these contracts represents five BTC. Quoted in US dollars, these contracts are cleared centrally to avoid counterparty risk.

CME options on Bitcoin futures are now trading

These options are introduced in response to “growing interest” in digital currencies and customer demand for tools to manage BTC exposure. As CME states, “CME options on Bitcoin futures (BTC) are now trading.”

To track BTC price, CME relies on data from multiple top bitcoin exchanges. Currently, the BTCUSD price is trading at $8,505 with a gain of over 5% in the last 24 hours, per Coinmarketcap.com.

As the first mover, when CME launched bitcoin futures in December 2017, BTC price topped around $20,000. Bakkt’s launch also saw BTC price dragging but this time there isn’t notable movement in BTC price.

Unlike other exchanges, CME is a regulated platform to trade cash-settled bitcoin futures, just like Bakkt. ICE’s Bakkt launched options in December 2019.

Before this launch, CME recorded strong activity, noted analytics firm Skew. Open interest on CME Bitcoin futures has also jumped in the excitement of options launch.

While good for BTC, this might not be positive for altcoins as trader Ceteris Paribus notes:

“the more we see products like this get offered the more bearish it is for the majority of alts…99% of alts are basically quasi-derivatives of Bitcoin. Now we’re getting actual derivatives to trade. Majority of alt volume was just seen as beta within crypto… now there will be easier, more liquid ways to get that.”

Increasing demand for crypto derivatives

Speaking about the “high anticipation” of Bitcoin options launch on the CME, Bloomberg’s Sonali Basak who has ”very heavily” covered BTC said, “There’s been high anticipation for institutional adoption of Bitcoin for a very long time.”

Although futures and options markets are opening up, Basak said, some of the fundamental concerns for big institutional investors in the form of regulatory risk and how to treat BTC are still problems.

Reflecting on JPMorgan Chase’s report from Jan. 10 that claims that institutional interest in Bitcoin-related contracts is building but the digital assets’ intrinsic value is still below its market value, she said, “on one hand there’s a lot of institutional interest but on the other hand there’s a lot of risks still there.”

But the “Bloomberg Daybreak: Americas,” host points out it’s exactly the way investment banks treated, to which Basak says,

“Let’s be honest investment banks love risk and so they wanna love it (..)They want to love it and they are aware that it’s there but there’s a lot of risks Bitcoin does pose to existing business models.”

Bitcoin options are having a good start of 2020

However, CME wasn’t the only one that launched options, Binance-backed FTX also launched options on bitcoin. The exchange also recorded strong activity, within the first two hours it saw $1 million in trading activity.

As for the current Bitcoin futures options volume, the picture somewhat looks like this,

Bitcoin options are having a good start of 2020. Just last week, daily volumes climbed to $90 million.

Among these exchanges that have options on bitcoin, Deribit exchange accounts for 95% of all trading activity last year. But last week, the Dutch-based exchange moved its operations to Panama citing regulatory concerns.

What do you think about the growing Bitcoin futures market? Share your thoughts in the comments section below!

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