Leading derivatives exchange operator, CME Group announced in a press release today that it will launch options on its bitcoin futures contracts in Q1 2020, pending regulatory review.
The announcement today comes as a confirmation to earlier rumors that the exchange plans to add other bitcoin futures products to its gallery, in preparation for more institutional client onboarding.
“Based on increasing client demand and robust growth in our Bitcoin futures markets, we believe the launch of options will provide our clients with additional flexibility to trade and hedge their bitcoin price risk,” said Tim McCourt, CME Group Global Head of Equity Index and Alternative Investment Products.
McCourt further explained the purpose of the new products, which is to “help institutions and professional traders to manage spot market bitcoin exposure, as well as hedge Bitcoin futures positions in a regulated exchange environment.”
Is Institutional Interest in bitcoin on the Rise?
While critics may argue that there is lower institutional interest in bitcoin than enthusiasts imagine, CME Group noted in today’s release that since launch, they had witnessed an increase in the number of institutions trading bitcoin.
“Year to date, nearly 7,000 CME Bitcoin futures contracts (equivalent to about 35,000 BTC) have traded on average each day. At the same time, institutional interest continues to build with the number of large open interest holders reaching a record 56 in July,” a section of the release confirmed.
It is also worthy to note that the increase in the price of bitcoin throughout 2019 must have influenced the numbers provided by CME Group since the exchange reportedly witnessed a 950% increase in futures contracts following the market resurgence in April.
Meanwhile, CME Group’s comment on the increase of institutional interest mirrors that of Coinbase CEO, Brian Armstrong, who confirmed earlier this year that institutions now invest $200-400M a week in cryptocurrencies.