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CME Bitcoin Options Eclipses Bakkt With a Strong Start

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CME

CME

CME Group’s Bitcoin options got off to a good start this week with US$2.3 million traded on the first day, eclipsing the slow start made by rival exchange Bakkt.

The Chicago Mercantile Exchange (CME) launched its highly anticipated Bitcoin (BTC) options on Monday, with 55 contracts changing hands on the first day alone. An options contract represents a right, but not an obligation, to purchase one Bitcoin futures contract, which represents 5 BTC or approximately US$2.3 million at its current value.

CME is a direct rival of Bakkt, a crypto trading platform launched by the parent company of the New York Stock Exchange, the Intercontinental Exchange (ICE). Bakkt was one of the most anticipated arrivals in the crypto space in 2019, having been touted as an access point for institutional investors to the world of crypto. However, things didn’t go quite to plan for Bakkt, as trading volumes fell well short of expectations, with just 623 contracts being exchanged in the first week of launch.

“Successful options products require a robust, liquid underlying futures market, our CME Bitcoin futures have rapidly evolved over the last two years to become one of the most liquid, listed bitcoin derivatives products in the world, averaging nearly 6,400 contracts (equivalent to 31,850 bitcoin) traded each day in 2019,” Tim McCourt, managing director at CME Group, wrote in a LinkedIn post.

The strong debut of CME’s options contracts coincides with Bitcoin’s best start to a new year since 2012. On Tuesday, the world’s leading cryptocurrency hit a two-month high of US$8,745, rocketing 8% in just under 24 hours. While the considerable interest in the multiple futures products now available to investors likely played a part in those gains, renowned BTC trader Murad Mahmudov said a combination of price, volume, and open interest in the crypto space are likely to signal a further bull run.

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However, a single day of trading is not enough to truly gauge the future performance of CME’s options trading, and the first weeks and months will provide a clearer picture of the state of the new Bitcoin options market.

Featured Image: DepositPhotos © grejak

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CME Group to Launch Bitcoin Options in Early 2020

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Bitcoin options

Bitcoin options

Over the years, cryptocurrency has developed at a remarkable pace, and an investment instrument like Bitcoin options would have been unthinkable even a few years ago. However, the march of Bitcoin, blockchain, and cryptocurrencies has been relentless. Hence, it is not really a surprise that options are at last going to be launched for the biggest cryptocurrency in the world by market cap—and by CME Group no less.

More Leverage for Crypto Traders

In a new development, the Chicago Mercantile Exchange (CME Group) has announced that options are now going to be made available to traders as part of the broad category of products that come under Bitcoin futures contracts. The options are going to be available by the first quarter of next year, provided it is cleared by the relevant regulators.

The introduction of Bitcoin options is primarily due to the fact that it allows investors to create a hedge when it comes to their trading strategies, and it could well prove to be a superb addition. The Chief of Equity Index and Alternative Investment Products at CME Global spoke about the development: “Based on increasing client demand and robust growth in our Bitcoin futures markets, we believe the launch of options will provide our clients with additional flexibility to trade and hedge their Bitcoin price risk.”

>> Bakkt’s Bitcoin Futures Goes Live: Should You Be Excited?

It is a well-known fact that Bitcoin can be a volatile asset from time to time and so the risks for those trading in futures contracts can be quite high. In such a situation, it is only natural for an exchange to provide options as well, so that the risks can be managed better.

The emergence of a wider variety of products is also going to encourage new investors to come into the picture and further strengthen the cryptocurrency ecosystem as a whole. There has been demand for more Bitcoin futures for some time now, and it seems that traders are all set to get their wish next year.

Featured image: DepositPhotos © grejak

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CME Sees Second-Best Month for Bitcoin Futures Trading

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CME

CME

January was the second-best month for CME’s Bitcoin futures trading since its 2017 launch, averaging 10,800 contracts, 69% greater than the average daily volume in 2019. Last month also saw new options on Bitcoin futures picking up pace. Since launch, 466 options contracts, or 2,300 equivalent Bitcoin, have traded—nearly 40% as blocks, showing signs of institutional interest, CME said. It also registered a record monthly average of 56 large open interest holders (entities that hold 25+ contracts).

The Chicago Mercantile Exchange (CME) launched its Bitcoin futures options last month, with US$2.3 million traded on the first day alone, eclipsing the slow start made by rival exchange Bakkt, which is headed up by the parent company of the New York Stock Exchange, the Intercontinental Exchange (ICE). Both platforms were launched with the intention of increasing institutional investment in cryptocurrencies, essentially trying to make the trading of digital assets more mainstream.

Bakkt, which was one of the most eagerly awaited arrivals to the crypto world last year, has hugely underwhelmed since its launch in September, particularly in comparison with CME. The strong start to CME futures options has helped drive a resurgence in Bitcoin (BTC) value. After plummeting to $6,860 earlier in the year, the world’s leading cryptocurrency bounced back and is currently staring at a 3-month peak of over $10,200.

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CME also revealed that it has seen a total trading volume of over US$100 billion since its launch in December 2017, which is an overwhelming endorsement of institutional interest in crypto trading. Tim McCourt, Group Managing Director of CME, also said that the exchange operates the most liquid Bitcoin derivatives markets in the world, which is an indication of market maturity, something that institutions generally look out for and could be a factor in driving higher trading volumes in future.

CME Group also reported its Q4 earnings today of $544.4 million or $1.52 per share. Analysts had expected the company to earn $1.54 per share, while revenue for the quarter fell 8.1% to $1.14 billion from $1.24 billion last year.

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