JPMorgan Strategist: "High Anticipation" Among Institutional Investors for CME’s Bitcoin Options Launch

Marco Green
January 13, 2020

Although market options for bitcoin have been provided by the digital assets institution Bakkt for about a month now, the volume and the interest have been "rather small", as analyzed by a team led by JP Morgan Chase Managing Director, Nikolaus Panigirtzoglou in a report.

According to the report, CME is dominating in trading Bitcoin Futures on regulated exchanges, which could serve as the game-changer in the long run.

JP Morgan Chase bank, the largest bank in the USA with total assets of US$2.765 trillion, has stated that it anticipates good response to CME Group's Bitcoin (BTC) options trading when it is launched for clients on January 13. The number of large open-interest holders has also grown.

"This unusually strong activity over the past few days likely ref lects the high anticipation among market participants of the option contract", Panigirtzoglou wrote.
At times it has appeared to be a drag on the price, such as when ICE debuted its new futures contract in September. Now, it's to be seen how will the price react next week.

In this regard, Sonny Singh, Chief Commercial Officer at cryptocurrency payment processor BitPay, stated that even a minute group of fresh investors entering into cryptocurrency sector by investing in Bitcoin was more than adequate to push the market in a particular direction.

While JPMorgan did not link last week's uptick in futures activity to BTC/USD performance, the pair nonetheless made significant gains, rising 15% from $7,300 last weekend to local highs in excess of $8,400. JPMorgan calculates intrinsic value by treating Bitcoin as a commodity and looking at the marginal cost of production including computational power employed and cost of electricity.

The market price of bitcoin has declined by nearly 40% from its peak, while the intrinsic value has increased by around 10%, strategists said. But "the gap has not yet fully closed, suggesting some downside risk remains".

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