Cryptocurrency Derivatives Series: Buzz in Cryptocurrency-Derivatives Market Amid Bitcoin’s Interim Softness

Over a one-week period, it becomes abundantly clear as to just how volatile Bitcoin has been as of late, as it dropped to lows of $9,100 last week before surging past $11,000, which was subsequently followed by a sharp selloff that has led the crypto towards its current prices.

For now, it seems that Bitcoin is likely to plummet towards the $9,000 areas, it is prudent to note that the CME Futures gap that exists around $8,500 could be a logical level for the cryptocurrency to drop to before it finds any meaningful support, we’ve reported the same in our recent post.

Now, the significant thing is that how could we interpret these futures contracts to gauge Bitcoin positioning? To know this, we apply the open interest position proxy methodology (previously applied to other futures contracts) to the above two Bitcoin contracts. The JPM’s open interest position proxy is based on the cumulative absolute change in the open interest multiplied by the sign of the futures price change every week.

Cryptocurrencies have been volatile in 2019 so far, while the industry sensed a crunch time in 2018 as more number of challenges were in place, which in turn creates huge opportunities for the crypto derivatives market. 2019 has claimed record volumes on the crypto derivatives exchanges.

While in the recent past, BitMEX has been under the limelight for their leveraged instruments over $61 billion worth of trading volume from crypto derivatives, with $78.6 billion being recorded. 

Bitmex has originally introduced Perpetual Swaps in the recent past, which is a derivative product that was instrumental for trading like Future contracts but without any expiry or settlement. The facility supports BTC, EOS, BCH, BSV, ETH, and XRP contracts.

Arthur Hayes, CEO of the largest cryptocurrency exchange seems to be intending to unveil crypto options platform. The CEO of BitMEX crypto exchange hints that their clients can stay invested in S&P 500 portfolio and Nasdaq using Bitcoins (BTC).

Hayes divulges in an interview that he is looking forward to thinking beyond Peer-to-peer crypto trading platform. BitMEX is reportedly looking ahead for unveiling the cryptocurrency option platform, within a span of 12 to 18 months as a timeline to go live the market. 

Hayes says that “we hope to possibly have our own options platform in maybe 12 to 18 months”

Elsewhere, CME has been no exception from recording a high volume of $6.6 billion on a month-on-month basis.

The CEO CoinFLEX, Mark Lamb, recently hinted that the avenue for stop trading of crypto assets is growing big time, and it may continue to surge exponentially in the years to come. He appended by stating, “the size of the crypto derivatives market will mushroom to 20 times the size of the underlying spot BTC market by the end of 2020, “I think crypto derivatives have been part of an evolution. This is where all the growth is.”

Most significantly, Bakkt has also diligently initiated user acceptance testing for its bitcoin futures listed and traded at ICE Futures U.S. and cleared at ICE Clear US.

Bakkt’s collaboration with the ICE’s leading futures exchange and clearing infrastructure to bring physical delivery futures contracts to market participants in 30 countries.

Well, on the back of above developments, it was another chaotic trading week in the crypto asset trading markets as the Bitcoin price plunging as low as USD 9,170 on Wednesday and as high as USD 11,120 during the weekend session, before eventually settling at the USD 10,500 level to close the week.