It seems that traditional institutions are finally realizing that no-can-do without cryptocurrencies anymore. If we look at the market movements, there is huge impatience for the launch of CME Group Inc. options that should happen today.
It is interesting because it is not the first of a kind. Bakkt that is under New York Stock Exchange parent Intercontinental Exchange Inc. began with the work in December last year. Moreover, as we have recently reported, yesterday FTX crypto derivatives exchange platform announced the launch of Bitcoin options trading.
However, as said by JPMorgan’s strategic analyst Nikolaos Panigirtzoglou, “volumes and open interest have been rather small.”
If we look at the fact that CME Group has been pretty much dominant when it comes to Bitcoin futures trading, this new offering, as per JPMorgan, could change some things.
Panigirtzoglou says “there has been a step increase in the activity of the underlying CME futures contract over the past few days.” However, he notes that open interest grew 69% from year-end, as well as the number of large open-interest holders.
He said:
“This unusually strong activity over the past few days likely reflects the high anticipation among market participants of the option contract.”
Every Time a Different Story
The thing is, every time new Bitcoin contracts are introduced, it was different. Sometimes it seems to be dragging the price down (as in the case when ICE debuted its new futures contract in September) and another time – the price hit the stars. We all remember the price record of $19,000 in December 2017 that occurred just as CME Group and Cboe Global Markets Inc. launched futures on the world’s largest cryptocurrency.
Bitcoin was falling 0.15% to $8,133 at the time of writing. That means it is near its highest levels since mid-November.
Panigirtzoglou said:
“The market price has declined by nearly 40% from its peak while the intrinsic value has risen by around 10%. But the gap has not yet fully closed, suggesting some downside risk remains.”
Even though JPMorgan analysts are partially right, we shouldn’t forget last week’s uptick in futures activity to BTC/USD performance. The pair made exclusive gains, meaning it rose 15% from $7,300 last weekend to local highs in excess of $8,400.
U.S.-Iran Tensions Strengthened BTC
Theories are different but the truth is that the strong performance has a lot to do with geopolitical uncertainty centered on Iran. Last week Iran conducted an attack on U.S. troops in Iraq after the U.S. killed one of their eminent generals and Quds Force head Qassem Soleimani.
When the political situation goes out of order, investors tend to search for their safe haven – whether it is oil, real estates, gold, or, nowadays – cryptos. The situation last week escalated (and it didn’t help that Iranians “accidentally” shot down the Ukraine civil plane) and it was almost like the third world war will happen. However, tensions seem to soften up a bit but Bitcoin seems to keep its steady position above $8K.
Sonny Singh, chief commercial officer at cryptocurrency payment processor BitPay, confirmed recently that even a small number of new investors coming into Bitcoin was enough to move the market more decisively. He added that, including both the Iran crisis and the participation of companies such as Fidelity Investments, Bitcoin could be breaking its all-time highs of $20,000 in 2020.
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