Bitcoin (BTC) futures options trading is now live on the Chicago Mercantile Exchange – CME. The offering went live yesterday Jan. 13 and began trading after it successfully got approval from regulatory authorities.
The CME Group announced this on its website as trading went live. According to the page, Bitcoin futures options were created to satisfy customers’ yearnings. It says it was done “in response to growing interest in cryptocurrencies and customer demand for tools to manage Bitcoin exposure.” It also explains that the options available are based on the regulated CME CF Bitcoin Rate (BRR). The launch took place sometime around 15:00 UTC.
Day 1 of CME Bitcoin Options
The CME Group’s first day of Bitcoin options turned out to be an interesting one as trading in its first session pulled in 54 options on day 1 alone. One of the options consists of 5 Bitcoin, meaning that trading total hit 270 Bitcoin.
It is interesting because 270 Bitcoin means about $2.18 million, which is way ahead of the numbers seen by competing platform Bakkt. Over the last five days, Bakkt has only seen $1.1 million, less than half of the CME’s first day.
Bloomberg Intelligence analyst Mike McGlone believes, however, that these platforms probably shouldn’t be judged exactly by how well they perform on their first. According to him, the first few weeks or first months should be considered instead.
Anticipating CME Bitcoin Options
The advantages of a marketplace with Bitcoin options offerings are huge. All Bitcoin products, whether derivative or not, do a little more for adoption for the king coin. This will eventually increase popularity and create trust.
McGlone also believes these offerings are great for the market. The analyst said:
“The launch of listed options on futures is a significant step in the direction of increasing exposure to Bitcoin. Options are only launched and tradable on a liquid underlying and the trend in BTC futures on the CME is increasing volume and open interest.”
Competition In The Options Market
While CME might not be doing badly at the moment, it’s a little too early to fully conclude. There is more than enough volatility in the crypto market to push Bakkt’s Bitcoin options volumes past the CME’s. When it is considered that the Bakkt platform’s early days were somewhat disappointing, it’s easy to see why things could change.
Also, crypto derivatives giant FTX is trading Bitcoin Options as well. FTX CEO Sam Bankman-Fried announced in a tweet on Sunday, Jan. 12, just one day before CME’s offering went live. Another tweet revealed that FTX options pulled in a $1 million volume in less than 2 hours.
Furthermore, interesting news from market analyst Skew Markets says that global futures crossed $20 billion on Jan. 8 alone, in trading volume.
On one hand, this is a clear sign that the Bitcoin options market will be seeing fierce competition. However, it also means that there is more than enough space for more entrants, to satisfy the growing demand.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.