JPMorgan Notices “High Anticipation” For Bitcoins Options CME Will Launch

For some time now, interest from institutions in regards to contracts related to Bitcoin has been on the rise, according to JPMorgan Chase & Co. Furthermore, the group claimed that various market measures show that anticipation is high for CME Group Inc. to launch its own Bitcoin options on the 13th of January.

Following Bakkt’s Footsteps

The Bakkt consortium has beat cryptocurrency exchanges to the punch when it comes to this. The exchange, fathered by the Intercontinental Exchange (ICE), started its various Bitcoin offerings a month ago. However, it seems that the reception has been less-than-perfect, with Nikolaos Panigirtzoglou writing that the open interest and volumes have been “rather small” on the 10th of January, 2020.

The CME holds relative dominance when it comes to Bitcoin trading futures on various regulated exchanges. Panigirtzoglou and his strategists theorize that this new offering may shake up the status quo.

Panigirtzoglou explained that there was a noticeable increase in the activities of underlying futures contracts on CME during these past few days. To such a degree that Panigirtzoglou noted a staggering 69% rise in open interest since last year’s end, with that number only growing in the meantime.

Thus, Panigirtzoglou theorizes that this unusually sharp spike in activity is reflecting the high levels of anticipation among the financial world’s market participants for this upcoming option contract.

Flip Of A Bitcoin Option Coin

When it comes to launching a new Bitcoin contract, it’s either hit or miss. At some points in time, new contracts tend to drag the price down, and an example would be when ICE made a debut of its futures contract back in December. Others, though, causes spectacular results. The price peak of $19 000 back in 2017 happened just as Cboe Global Markets and CME launched futures contracts for the world’s first cryptocurrency.

Bitcoin has gone up 2.1% as of 11 AM in Hong Kong, the information given by way of the Bitstamp pricing index. This marks one of its highest levels since the middle of November.

Intrinsic/Market Disconnect

In other news, the intrinsic value of the Bitcoin has been on the rise but remains below market price due to a massive divergence that happened middle last year. The JPMorgan firm calculated intrinsic value by way of treating Bitcoin as a commodity, further looking at its marginal cost of production. In this case, it includes things like the cost of electricity and the amount of computational power needed to be employed.

Panigirtzoglou explained that, while the market price has dropped a staggering 40% from its peak, the intrinsic value has risen an impressive 10%. He explains that the gap has yet to be fully closed between those two values, and thus suggests some downside risk still lingering.