After it launched the contract earlier this month, the CME (Chicago Mercantile Exchange) has witnessed an increasing demand for its Bitcoin futures options.
CME Bitcoin Options Growing Rapidly
After recording massive volume in its first week, the demand for cryptocurrency derivatives continues to grow for the CME’s Bitcoin futures options. On the first day, the CME Bitcoin options recorded 55 contracts worth $2.3 million. This figure continued to steadily rise and by the end of the week, the volume spiked to 122 contracts with a value of $5.3 million. According to the CME, each option contract represents 5 BTC.
Based on this trend, it is clearly evident that regulated cryptocurrency derivatives products are seeing strong demand from investors around the world. In September last year, the Chicago Mercantile Exchange first announced the launch of its Bitcoin options. At the time, the CEO explained that they would be making the futures options available as a result of the increasing demand from their clients.
However, the CME was beaten to this offer by ICE-owned Bakkt, which launched its Bitcoin options in the US in December 2019. Interestingly, this was also launched alongside cash-settled Bitcoin futures in Asia. While the CME only launched its Bitcoin options on the 13th of January this year, it was still able to record 55 contracts on the first day.
Skew.com, derivatives markets researchers, reported on January 17 that CME’s open interest for Bitcoin futures was up by 100% since the beginning of the month. By January 17, the total Bitcoin options contracts sold on CME stood at 122 and worth around $5.3 million.
In a research note released on the 20th of January, Skew researchers stated that the first week of options trading on CME ended on a strong note with 610 bitcoin options trading on Friday. It is also important to note that the demand for crypto derivatives is not limited to the Chicago Mercantile Exchange only.
Skew also mentioned that a few days prior to the launch of its Bitcoin options by the CME, the global interest in BTC derivatives went up by 15 percent to reach $3.5 billion by the 15th of January. The surge was evident on other platforms including, Bitfinex, Deribit, LedgerX, CME, Bakkt, FTX, Huobi, OKEx, Binance, Kraken, and Bitmex.
Volume Drops for Bakkt
While the CME has been experiencing increasing volumes with its Bitcoin options, Bakkt’s market has been dealing with a declining volume. A recent tweet from Ecoinmetrics stated that currently, Bakkt is experiencing low trading activity. Compared to the numbers the CME is recording. They tweeted that “Slow increase in activity on the May’20/Jun’20 contracts after the halving — On the options side: 27 contracts traded and open interest climbing to 244 contracts.”
Although the CME has been seeing an increase in demand for its Bitcoin futures products, the volumes are still low compared to the leading crypto derivatives giants who provide services to retail consumers. Both the CME and Bakkt have a long way to go before they catch up to the leading derivatives providers of cryptos such as Bitfinex, Bitmex, and Coinflex.