Cryptocurrency
Bitcoin’s halving breathes life into CME’s options product with new accounts rapidly growing
As reported on The Block, “Bitcoin’s halving appeared to have fueled a surge in a trading product at one of Wall Street’s most important financial institutions. “Trading volumes and open interest in CME Group’s bitcoin options product has surged since the event last Monday, which saw the number of bitcoins produced with each transaction block […]
As reported on The Block, “Bitcoin’s halving appeared to have fueled a surge in a trading product at one of Wall Street’s most important financial institutions.
“Trading volumes and open interest in CME Group’s bitcoin options product has surged since the event last Monday, which saw the number of bitcoins produced with each transaction block falling from 12.5 BTC to 6.25 BTC (effectively cutting new coin issuance in half). CME, which is among the largest exchange groups in the world, launched its bitcoin options product at the beginning of 2020.
“As noted in a recent blog by CME, this year’s halving was unique relative to previous ones given the size of the derivatives market and the availability of options and futures on regulated U.S. exchanges. Options, specifically, can be used by miners to hedge their exposure in spot bitcoin. Miners can also use options to earn additional income.
“‘A robust options market could also allow for additional income to be earned by miners or enhance long bitcoin positions which would further cushion the impact of the upcoming halving,’ wrote Payal Lakhani, the firm’s director of equity research and product development. ‘With the emergence of a healthy options market, investors can take price signals and consensus estimates about market expectations.’
“Indeed, up until the halving, trading volumes and open interest for CME’s bitcoin options product were de minimis…”