CME Records Over 20x Growth in Total Bitcoin Options Open Interest Since May


Institutional grade Bitcoin derivatives platform, CME, is experiencing a superficial growth in options interest from its clients. The total open interest is on a skyrocketing path, witnessing a 2500% increase, from the May 1 at $13 million to over $360 million as of Monday, June 15, 2020.

However, the total daily volume of BTC options traded has dropped significantly during the past week as price levels faltered below the $9,000 mark.

Institutional Interest in BTC Options Explodes

CME Bitcoin options launched in early January this year, starting on a slow note before the market exploded about five months later in May. Across the past six weeks, CME Bitcoin options open interest increased from $13 million on May 1 to an all-time high of $373 million recorded on June 10, 2020.

Source: Skew Markets

Despite the slight retrace to $368 million on Monday, the 2000%+ growth signals a growing interest in institutional investment interest into trading regulated crypto derivatives. CME now holds over 23 percent of the total global OI on Bitcoin options, surpassing the OKEx and LedgerX markets.

A spokesperson of the company, however, said the company “has no plans to introduce additional cryptocurrency products” despite the demand.

A one-Sided Battle in Institutional Investment

According to Matt Kaye, a managing partner at Blockhead Capital, a crypto hedge fund, the increasing open interest gives a “strong signal that regulated institutions are exposing their books to bitcoin.” Investing in regulated BTC products comes at a higher cost, but it seems the institution is ready to pay it, Kaye said.

“CME has a higher cost of capital and is closed on weekends, so anyone trading there is likely making those sacrifices because they have to.”

However, CME’s largest competitor, Intercontinental Exchange’s Bakkt, is not experiencing similar fortunes despite institutional demand growth. Since launching in December 2019, the total OI on Bakkt BTC options has only crossed the $1 million mark thrice (from January 9 to 11th), currently languishing at $66,000 as of June 15.

Skew Markets BTC Open Interest

Source: Skew Markets

Bitcoin options interest has also ballooned in retail markets, given the extremely volatile prices of the top crypto so far. Deribit, the largest exchange dealing in BTC options, has recorded a 300% increase in total open interest since the start of the year. Deribit crossed the billion-dollar mark in the final week of May, setting an all-time high on June 12 at $1.2 billion.

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