CME Customers Lean Towards Trading Cash-backed Bitcoin Products

The Chicago Mercantile Exchange (CME), a global derivatives marketplace, revealed that Bitcoin futures investors lean towards cash payments over the physical delivery method they receive in Bitcoin (BTC).

Tim McCourt, who is in charge of CME’s stock index and alternative investment products, revealed that investors want to receive cash rather than physical Bitcoins when the futures contract expires. He further explained that through a bitcoin futures contract with cash settlement, investors can make investments using price fluctuations sans directly holding the underlying asset, BTC.

Halving triggered BTC options trading to heat up

The CME Bitcoin futures market is performing well, trading an average of 42,500 BTC daily. On May 14, Bitcoin futures unpaid agreement hit a record high of around 53,960 BTC. Then, on May 4, the exchange also registered 66 large open interest holders (LOIHs), and this was another all-time high.

In January 2020, CME also released a Bitcoin options product. On the day of the roll-out, it started smoothly, recording transactions of approximately $2.2 mln. Since the halving of Bitcoin on May 12, the number of Bitcoin option trading accounts has hit and exceeded 2,100 – the volume has been surging since the halving.

In addition, experienced traders or companies habitually take advantage of options to enclose their positions in the spot or futures market. For example, notable trading institutions hedged long positions in the spot market and purchased put options with the aim of bypassing losses in case of an abrupt downward movement before the halving happened.