Institutional FOMO On Rise As CME Bitcoin Options Volumes Set Record Nominal Highs


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Institutional FOMO On Rise As CME Bitcoin Options Volumes Set Record Nominal Highs

Chicago Mercantile Exchange (CME’s) Bitcoin options trading volumes hit an all-time high in nominal dollar terms on May 5 set a record $10 Million less than six months since launch. The soar in BTC option volumes gives a sense of institutional investment coming into Bitcoin as the cryptocurrency heads to its third halving.

CME Bitcoin Options Volumes at All-time Highs

According to data from Skew Markets, CME Option trading volumes hit an all-time high (ATH) of $9.4 million on Tuesday, May 5, 2020. The demand for BTC options in the regulated U.S markets is on the rise starting May after suffering over the past two months that saw the exchange go some days without trading any volume at all.

CME traded a total of 210 Bitcoin options – 202 call options and a further 8 put options yesterday on its May contracts. A closer look at the options shows that the May20 contract had $10,000 and $11,500 calls traded in lots of 100 lots of about 500 BTC options each. This presents a very bullish state for BTC going into the halving as the big players in the field bet on Bitcoin.

The CME Bitcoin option went live on Jan. 13 reaching a high of $5.4 million in notional USD value on Jan. 17. Since the volumes have gradually dropped despite BTC price volatility skyrocketing in March. The platform traded no contracts on May 1, 2020.

However, CME is greatly outdoing its biggest institutional competitor, Intercontinental Exchange’s Bakkt platform, which has seen little to no volume since January 17. Despite launching a month before the CME options, Bakkt has traded no contracts since April 22, recording $163,000 in options volumes since January.

An option contract is an agreement between a buyer and seller that gives the purchaser of the option the right, but not the obligation, to buy or sell the underlying asset at a predetermined price on or before a specific date

Bitcoin Soars Past $9,400, Institutional FOMO?

The current soar in CME’s BTC options volumes is not at all surprising given the recent volatility in BTC’s price. On Wednesday, May 6, 2020 the price of BTC hit $9,412 representing a massive 150% increase in price since the unfortunate crash on Mar. 12.

The 1-month put-call skew, which measures the price of puts relative to that of calls, stands at 6% representing its highest level in a week after oscillating in the negative region. A positive put-call skew means that calls are cheaper than put options which shows that there is more demand of calls which gives off a bullish standing in the near future price of BTC.

Author: Lujan Odera
Been in the field since 2015 and he still love everything blockchain and crypto! FC Barcelona fan. Author and journalist. Follow him at @lujanodera.
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Lujan Odera 385 Articles
Been in the field since 2015 and he still love everything blockchain and crypto! FC Barcelona fan. Author and journalist. Follow him at @lujanodera.
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