Bitcoin Options Trading Taking Market by Storm Exceeding Futures and Swaps

UTC by Steve Muchoki · 2 min read
Bitcoin Options Trading Taking Market by Storm Exceeding Futures and Swaps
Photo: Depositphotos

According to the recent data from Skew, Bitcoin options trading is becoming more popular in the market than futures or swaps.

As the cryptocurrencies’ popularity grows in the trading industry, Bitcoin options trading is attracting a significant number of investors and other market participants. Despite not being in the market for long compared to the traditional stock market, Bitcoin has been able to move from an ordinary asset to a major traded asset, with institutional players showing their interest.

According to data from Skew, Bitcoin options trading is growing at a fast pace in comparison to the futures and swaps market. However, since the cryptocurrency industry and the blockchain industry are possibly in the early stages of mass adoption, Bitcoin option trading has a long way to go.

“Although the open interest in bitcoin options is growing and is now roughly 35% that of futures and swaps, it still has a long way to go compared to traditional financial markets where options open interest and trading volumes are generally a multiple of futures,” said Su Zhu, co-founder of cryptocurrency hedge fund Three Arrows Capital. “It makes sense for Bitcoin to go a similar route as liquidity improves and institutional players come in,” he added.

Bitcoin Options Trading Volumes Are Growing

Bitcoin options trading has seen its regulation streamlined in major markets like in the United States, whereby it was made legal through the approval from the Commodity Futures Trading Commission (CFTC).

LedgerX CEO Paul Chou stated:

“A U.S. federally-regulated venue for derivative contracts settling in digital currencies opens the market to a much larger customer base.”

The growing trend in Bitcoin options trading is bolstered by the support from the Chicago Mercantile Exchange (CME), which has been offering the service in the past few years. During the launch of the Bitcoin futures trading by CME, CEO Terry Duffy said:

“Given the increasing client interest in the evolving cryptocurrency markets, we have decided to introduce a bitcoin futures contract.”

The continued growth in the Bitcoin options trading has been largely assisted by the trading offered by Bakkt. Bakkt is largely supported by its parent company, Intercontinental Exchange (ICE), hence making it a major player in the cryptocurrency industry.

Mostly, the level of transparency and market certainty has helped investors continue channeling their money into Bitcoin options trading. Therefore making the industry grow exponentially despite the ongoing coronavirus market disruption.

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Steve Muchoki

A financial analyst who sees positive income in both directions of the market (bulls & bears). Bitcoin is my crypto safe haven, free from government conspiracies. Mythology is my mystery! "You cannot enslave a mind that knows itself. That values itself. That understands itself."

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