In September 2019, CME Group announced that it would launch BTC options on futures in 2020. The group has made good on its promise. The platform announced the launch of the BTC options on futures via a tweet.
CME and the Crypto Sector
CME was the first trading platform to announced plans to launch a regulated BTC options market. However, Bakkt beat them in launching the actual product when it opened up its platform to BTC options trading. Additionally, it launched a BTC monthly futures contract in December 2019. There is another platform called FTX that has already launched BTC options trading. Currently, FTX experiences $1 million in trading volumes. However, this is more significant since CME Group is the leading BTC futures trading platform in the world.
A recent Bloomberg report indicates that there’s been high anticipation for this launch. The report notes that while Bakkt launched BTC options trading in December, open interest and volumes have been low. However, the report notes that this may change due to the dominance of CME in the BTC futures market.
According to one finance expert from JP Morgan Chase, there has been increased activity of the underlying CMU futures contract. He noted that open interest had grown by 69% from the end of 2019. Additionally, he noted that there had been a huge increase in the number of large open interest holders. The expert said that the strong activity in the past few days was an indication that there was high anticipation amongst market participants for the options contract.
Mixed Track Record
Past launches of BTC contracts have been met with mixed reactions. At times, it appears to negatively affect the price. For instance, when ICE launched the futures contract in September, it appears to have had a negative price impact. IN contract, when CME and CBOE Global launched futures contracts in December 2017, the BTC prices peaked at its all-time high of nearly $20,000.
Effect on Bitcoin Price
Since the launch was made, it appears to have had little impact on the price of BTC. However, this is positive news for BTC. It indicates that BTC is maturing as an asset class. Besides that, it could cause more investors to develop an interest in the crypto market, which could help to boost BTC prices.
Various other factors could help to improve the price of BTC, according to a recent report prepared by Thomas Lee, the co-founder of fundstrat. These three factors are:
- The BTC halving which will occur around May 12, 2020
- Geopolitical events taking place in the Middle East
- 2020 US Presidential Elections
This is an indication of the growing maturity of BTC. While it still has a long way to go before it can be on par with assets such as gold, it is making progress. In general, there are high expectations that BTC prices might be moving up this year. Some futures traders are predicting that BTC prices could rise as high as $12,000.
Bitcoin Price Already Strong 2020 Start
After returning nearly +85% last year to investors, Bitcoin price has already started off in the right direction to to enter the new year. So far year to date, bitcoin price has jumped +12%.
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