The Chicago Mercantile Exchange (CME) is one of the main American futures markets. In addition to conventional financial products, the CME offers Bitcoin derivatives, such as options or futures. Following the halving of the top cryptocurrency, bitcoin, the volumes recorded by the platform exploded.
The halving effect
After the launch of their Bitcoin options in January 2020, the sauce is finally starting to take over for the CME. Indeed, after having passed the period of uncertainty represented by the Bitcoin halving, the Bitcoin options platform saw its volumes multiplied by 40 in the timeframe of 3 days.
Evolution of volumes on CME options – Source: Skew.
On May 8, the platform recorded a volume of $ 1 million. Three days later, on the May 11 halving date, volumes climbed to $ 14 million. A record that will be broken the next day with 30 million dollars, then the next day with 40 million dollars in volume.
Open interest: the nerve of war
Although the volumes are a metric that gives a fairly good indication of the interest in a product, the open interest or indicator open positions seems more suited.
This metric represents the number of option contracts that are still outstanding. When we analyze the CME data on open interest, we see a drastic increase in the number of contracts still open, from 38 to 142 million in a few days. A phenomenon that can translate a bullish feeling on the side of investors.
Evolution of open interest on CME Bitcoin options – Source: Skew.
A wave of new users
In addition to seeing its volumes grow, the CME faces a wave of new users. According to data compiled by TheBlock, the first 15 days of May witnessed the arrival of even more new users than during the entire month of April.
Evolution of the number of users and new users on the CME platform – Source: TheBlock.
The majority of these users would turn out to be institutional investors, returning to the market following the halving.
While an increase in volume on Bitcoin derivatives can be good news for the price of the asset, no causal link is assured. As often, this increase may well have no impact.
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