The new year seems to be flooded with positive news for Bitcoin, now that the Chicago Mercantile Exchange (CME) had received regulatory approval for its Bitcoin futures options. Plans for launching these instruments were revealed back in November 2019, due to high customer demand for tools to manage Bitcoin exposure.
Bitcoin futures options live on January 13th
Interestingly, the Bitcoin price managed to break higher and reach the $8,500 yesterday, January 13th, after the announcement was made by the CME. Trading with derivatives on Bitcoin continues to expand, with the latest figures showing that the daily volumes for last week had been around $20 billion.
Slowly but surely, derivatives are on track to overcome the aggregate volumes reported by traditional cryptocurrency exchanges, currently standing at $29 billion. If reports about trading activity on exchanges being fake (due to wash trading) are real, it means derivatives for Bitcoin are the dominant market right now.
CME is the third operator announcing options on Bitcoin futures. At the beginning of December, Bakkt, the digital asset platform launched by the Intercontinental Exchange (ICE) was the first entity to launch Bitcoin options, and on January 11th this year, the crypto derivatives exchange FTX had done the same.
Volatility is one of the main reasons why investors are so attracted by Bitcoin derivatives. Now that institutions are able to trade instruments on regulated markets, we should expect the volumes to continue to increase and derivatives in the US to have a stronger influence on how the Bitcoin price will perform.
More upside for Bitcoin ahead?
More Bitcoin derivatives combined with commitments from China to boost education in the blockchain field had propped up sentiment in the cryptocurrency market. Since January 3rd, the Bitcoin price is up by approximately $1,700 and the market cap is back above $150 billion, according to data on coinmarketcap.com. Now that the Bitcoin price managed to break above the January 8th high, we have a confirmation that buying interest is stronger.
We could see, however, a minor setback in the short-term, but the higher high could be an indication that Bitcoin is poised to retest the $9,000 area for the first time since the beginning of November. The price action structure looks like there’s a short-term bottoming formation currently unfolding and that could be a positive factor as we move forward. Our take is that interest in Bitcoin will gradually increase over the upcoming months, considering that we have the next Bitcoin halving scheduled to take place in May.