Bitcoin Options May Bring More Institutional Investors – JPMorgan

Adoption Bitcoin Investing JPMorgan Trading

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Fredrik Vold

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Fredrik Vold

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June 26, 2023 06:54 EDT

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Yet another step forward in the institutional adoption of bitcoin will be taken today with the launch of the much-anticipated bitcoin options market by the major financial derivatives marketplace Chicago Mercantile Exchange Group (CME). (Updated at 15:06 UTC: updates in bold).

The giant confirmed on Monday that options on Bitcoin futures are now live.

As reported by Bloomberg, a note written by strategists at JPMorgan Chase & Co indicated “high anticipation” to the introduction of bitcoin options by market participants.

“There has been a step increase in the activity of the underlying CME futures contract,” the note pointed out, while adding “this unusually strong activity over the past few days likely reflects the high anticipation among market participants of the option contract.”

The note also said that trading volumes and open interest in other options markets – such as the one offered by Bakkt – has been “rather small.” However, given the dominance of CME in the bitcoin futures market, things may now change, the note said.

As pointed out by some in the crypto community, however, there is an argument to be made that the introduction of more financial products that make it easier for institutions to trade bitcoin, is bad for altcoins.

As reported, CME Group is adding bitcoin options based on its existing bitcoin futures contracts. Options are tradeable securities that give the holder an option, but not an obligation, to buy or sell an underlying asset – in this case, bitcoin futures contracts – at a given price and at a predetermined date in the future.

Options are thus unlike futures contracts, which, at their expiration date, obligates the holder to take delivery of the underlying asset. Both options and futures are leveraged products that are popular among financial institutions and professional traders.

Meanwhile, on January 9, major crypto exchange OKEx announced that their BTCUSD Options trading went live.

Also, crypto derivatives trading platform FTX says it has launched Bitcoin options trading. The company’s CEO took to Twitter over the weekend to claim, “Options are live!” FTX later claimed that options trading volume on the platform had hit the USD 1 million mark in around two hours.