Cryptocurrency Derivatives Series: Quick Run Through On Bitcoin Price And CME BTC F&O Volumes Resurgence

Of late, the cryptocurrency derivatives trading volumes have been considerably plunged especially in September. The renowned CME (Chicago Mercantile Exchange) showed sturdy Bitcoin futures performance, simultaneously the options tradings were also blown-up.

While the underlying price of Bitcoin (BTCUSD at Coinbase) has resurged from the lows of $10,363.76 to the yesterday’s highs of $11,736 levels.

Thereby, technically the consolidation phase continues upon the occurrences of hammer patterns (at 10,375 & 10,573 levels), bulls attempt to take-off rallies above 7 & 21-DMAs testing strong support at 100-DMAs, $10,585. For now, more rallies seem to be on the cards amid minor price dips on overbought pressures (refer daily chart).

It has been a quiet time in this year for the price action among crypto-avenues as the major crypto pairs, such as, Bitcoin and Ethereum price plunged in the recent past.

But for now, crypto markets appear to be healthier after a minor price dip in the recent past following news that US authorities (CFTC) had filed charges against Bitcoin derivatives exchange, ‘BITMEX’ and its founders of allowing unregistered trading and ongoing violations of US anti-money laundering laws.

As a result, the underlying price of Bitcoin plummeted to as lows of USD10,431 on October 2nd but subsequently ended the week near the USD10,600 levels.

However, on a broader perspective, BTC has spiked from $3,858 to the recent highs of $12,486 which is 226% rallies since mid-March (refer monthly chart). The major price trend, on this timeframe, has been hovering at 50% Fibonacci levels of $3,108 levels. Currently, it is trading at $11,463 levels and more upswings are foreseen.

Accordingly, the long hedges have already been advocated using CME BTC Futures, we advocated long hedges when spot reference was at $4,927 levels. It is unwise to bet on speculating/trading the next upside target and accumulate fresh bitcoins. Instead, one can certainly uphold the above advocated long hedges using December’20 deliveries.

Cryptocurrency derivatives operations have been on a roller-coaster owing to the covid-pandemic.

CME options contract volumes have surged 79.4% in the month of September with total number of 4,872 contracts traded.

While CME BTC options trading volumes have been topsy-turvy so far in this year, sluggish since the beginning of this year, but gradually rebounded in May and June months. It has been tepid during July and August but it has shot up again in September (refer 3rd & 4th charts).

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