CME’s July Rally: Bitcoin and Ether Options Volume Jumps 16.6% and 60% Respectively

The derivatives giant Chicago Mercantile Exchange (CME) has reported robust growth in crypto options trading volume during the month of July. The surge in trading activity comes after a lull, with the first increase recorded in the past four months. According to data tracked by CCData, trading activity rose by an impressive 24% to reach a total volume of $940 million.

The most notable increase was observed in Bitcoin (BTC) options, which soared by 16.6% to reach a volume of $734 million. Ether (ETH) options also witnessed a substantial surge, recording a remarkable 60% increase, and reaching a volume of $207 million. This boost in crypto options trading signals a clear indication of growing investor interest in hedging tools.

According to CCData, the surge in BTC options volume on CME suggests that institutional investors might be leveraging options to hedge their positions in the face of lingering uncertainty in the market. The cryptocurrency market has been experiencing fluctuations, and investors are turning to options as a way to manage risk more effectively.

Source: CCData

Options are derivative contracts that grant the purchaser the right to buy or sell the underlying asset at a predetermined price on or before a specific date. In the case of CME’s options, buyers of call or put options have the right to buy or sell one cryptocurrency futures contract at a specific price at some point in the future.

CME offers both Bitcoin and Ether options, which are based on the exchange’s cash-settled standard and micro BTC and ETH futures contracts. Standard contracts are sized at 5 BTC and 50 ETH, while the micro contracts are one-tenth of 1 BTC and one-tenth of 1 ETH. This range of options allows investors of varying scales to participate and manage their exposure effectively.

The surge in options trading comes amidst a turbulent month for cryptocurrencies. Both Bitcoin and Ether experienced a 4% decline in July, partly due to fading optimism surrounding the potential launch of a Bitcoin-spot Exchange-Traded Fund (ETF). Additionally, regulatory uncertainty and DeFi (Decentralized Finance) hacks contributed to a certain level of market uncertainty.

Interestingly, Bitcoin’s correlation with traditional assets such as stocks and gold increased during this period, especially when compared to the latter half of June. As a result, investors saw the value in using options as a means to hedge their directional exposure in the crypto market, thereby mitigating potential risks.

In conclusion, CME’s impressive growth in crypto options trading volume in July indicates a growing interest in hedging tools among investors. With the crypto market’s inherent volatility and the continuous interplay between regulatory developments and market sentiment, options present a valuable instrument for managing risk and safeguarding positions. As institutional participation in the crypto space continues to expand, the role of options is likely to gain even more prominence in the months ahead.

Read more:

Join us on Telegram

Follow us on Twitter

Follow us on Facebook

Follow us on Reddit

You might also like