Opinion: the launch of bitcoin options on the CME exchange will attract new investors to the market

Opinion: the launch of bitcoin options on the CME exchange will attract new investors to the market

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Frank Chaparro, an analyst at The Block, is confident that the launch of Bitcoin options on the Chicago Mercantile Exchange (CME) will be an important step in the development of the derivatives market and will serve as a powerful signal for investors.

Bitcoin options trading in the largest North American derivatives market is due to begin today, January 13th. These instruments appeared on Bakkt, an increasingly popular regulated exchange, a little earlier, on December 9th. A few days later, the first block deal with Bakkt’s monthly bitcoin options took place at ICE Futures U.S.

Also, similar tools will soon appear on the CoinFLEX and Bitfinex trading floors.

“Deribit Derivative Exchange, which will soon be based in Panama, has been offering options trading for several years now. The daily trading volume on this site in December was close to $ 300 million. ”

Many transactions on Deribit are conducted using an automated platform from Paradigm, a New York company.

Chaparro is confident that CME’s entry into the Bitcoin options market signals a new stage in the development of the crypto industry. According to him, the Chicago Mercantile Exchange is one of the largest players in this segment of the financial markets, interacting with influential hedge funds and other investors.

GSR cryptocurrency trading co-founder Rich Rosenblum noted that CME options will have the properties of traditional financial instruments.

“Making options a significant part of the crypto industry was just a matter of time,” added Rosenblum.

Options give the right to market participants in the future to buy an asset at a certain cost (strike price). For example, an optimistic investor may acquire a call option, which gives the right to buy bitcoin at $ 10,000 for a certain time.

If BTC rises above this mark, the difference between the market value and the strike price will become the profit of the market participant.

Such derivatives also open up new opportunities for investors to manage risk. Options may be of particular interest to miners, which is especially true in the face of uncertainty before the May halving.

Earlier, analyst Matthew Yamamoto expressed the opinion that after halving the block rewards, only mining companies with energy-efficient and at the same time productive equipment will survive.

Also recall, CoinShares Meltem Demirors believes that the emerging derivatives market will not allow the price of bitcoin to rise after the May Halving.

Opinion: the launch of bitcoin options on the CME exchange will attract new investors to the market

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