The cryptocurrency derivatives market seems to be on fire right now, as Bitcoin derivative products continue to rocket and hit their new all-time highs.
The number of Bitcoin Options trades has grown impressively on the Chicago Mercantile Exchange (CME) within the last two months. According to the data of crypto derivatives analytics Skew the volumes of CME Bitcoin Options contracts inflated nearly 25 times since April. The average daily volume (ADV) grew from 91.2 BTC in April to 1496.5 in May and continued to increase further up to the heights of 2392.7 BTC in June.
Bitcoin Options are the type of derivative contracts that contrary to Bitcoin futures give the right, but not the obligation to buy Bitcoins at a predetermined price within the specified time in the future. They are one of the largest groups of contracts on the derivatives market, which is currently boosting, with a total volume exceeding $2 trillion within the first months of the year.
Following the statistics from Skew, Deribit exchange was the main Bitcoin Options volume generator. The crypto derivatives trading platform processed the biggest share (88%) of Bitcoin Option worth 8473.60 Bitcoins. OKEx, which started trading Bitcoin Options just a few weeks earlier than Deribit, traded 7% of a daily volume with its 696.80 Bitcoins. Simultaneously, the CME held 4% of the total market share of Bitcoin options transaction volume.
Growth of Bitcoin Options Open Interests
Despite the fact, the numbers of unsettled Bitcoin Options contracts on Chicago’s CME started to grow steadily since the beginning of May. The amount of total Open Interests of CME’s Bitcoin Options boosted nearly 10 times and rocketed from $35 million in May up to the new all-time highs (ATH) of $373 million at the time of publishing.
Open Interests is the number of unsettled contracts that are held open by the market participants at the end of the day. Since the size of Open Interests measures the total activity of the BTC Options market, the large amount of unsettled contracts usually means that liquidity is higher and that the current price trend is not going to change soon.
The increased amount of Open Interests placed CME in the second position of the global Bitcoin Option Open Interests market, where it has 23% of shares. Meanwhile, Deribit exchange keeps being the leading derivatives exchange with 70% of the total number of unsettled Bitcoin Options.
Institutional clients show appetite for crypto
Crypto derivatives exchanges like Deribit, Chicago’s CME or OKEx opened Bitcoin Options for trading mostly within the last 12 months. Since then the demand of crypto derivatives kept constantly growing mostly fueled by the more positive attitude of institutional investors towards cryptocurrencies.
The crypto derivatives market skyrocketed in the first quarter of the year when their total volume, mainly accelerated by Bitcoin Futures, exceeded $2 trillion. However, since then BTC Options become another area that is seeing impressive growth.
Furthermore, as DailyCoin reported previously, the leading crypto asset management firm Grayscale Investments acquired around one-third of the newly mined Bitcoins since its third halving in May. Moreover, it revealed that it’s clients – traditional hedge funds – are turning towards cryptocurrencies as a hedge against inflation.
The increasing interest from institutional investors plays a significant role in shaping the character of the world’s leading digital asset. According to analytics, Bitcoin derivatives, like futures and options, may help to establish the decentralized digital asset as a more stable investment. This means that institutional trust may play a key role in decreasing sharp fluctuations of Bitcoin’s price.
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