Banking giant explores Bitcoin options – Positive for the Bitcoin price?

  • The banking giant JPMorgan is investigating Bitcoin options in detail so that a new big player could soon enter this market.
  • Industry experts are divided on whether the Bitcoin price can benefit from this in the long term.

Since the launch of Bitcoin futures and derivatives trading, Bitcoin’s volatility has increased sharply and caused large price fluctuations. The trading volumes of the Deribit, BitMEX and CME and Bakkt exchanges continue to show strong growth.

BitMEX is suspected to have played a major role in the last flash crash of Bitcoin, as long contracts worth more than USD 100 million were liquidated over the weekend. Large financial institutions and banks have been monitoring current market developments for some time and are exploring the launch of further Bitcoin financial products. JP Morgan is thinking about launching Bitcoin options, according to a new report.

JP Morgan Global Research Report: Demand for Bitcoin financial products increases

Back in 2017 and 2018, Jamie Dimon, CEO of JP Morgan railed against Bitcoin, calling the cryptocurrency a fraud that the governments of the world will “smash”. However, that opinion has changed to this day. A new report from JP Morgan “Global Research” covers 74 pages and examines the current developments in the crypto market in more detail.

Aggregated open interest across the leading exchanges rose to a new record high at the beginning of February. JP Morgan also concludes that demand for Bitcoin financial products continues to grow, especially among institutional investors:

The combined option open interest at Derebit/LedgerX is decent at around $500mn, in dollar terms around half of the futures open interest we see at Bitmex and CME together (Figure 2). This suggests that there is genuine demand for non-linear institutional trading products in crypto markets.

The following graph of the report illustrates this relationship and shows the current trend:

Source: https://markets.jpmorgan.com/research/open/url/t59R6MoBP2TUkWA_itSQBbfUlco1CmYnoNL3dA6WVSm82drJuOYLvdZIqDyuXyp-L4OrVEFw_eAu4UgzicsInqAwjcbKIQHiPfGEjPF2Rt5PKUltFmEKGQaC3DeLBoW7?action=print

Although it is at this stage rather unlikely that JP Morgan itself will offer Bitcoin options in the near future, the interest of the banking giant shows the progressive adaptation of Bitcoin as an alternative investment product. According to JP Morgan, demand has increased, especially for institutional trading products.

Most recently, the Chicago Mercantile Exchange (CME) launched Bitcoin options on January 12 this year. Bakkt launched Bitcoin options in mid-December last year. This financial instrument is offered to traders in order to better protect their capital. Whether Bitcoin options have a positive impact on the Bitcoin price remains controversial. The well-known trader Ceteris Paribus thinks that Bitcoin options have a negative influence on the market.

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JP Morgan further expands Blockchain division Quorum

As Crypto News Flash has already reported, JP Morgan is in active negotiations with the Ethereum development studio ConsenSys. According to the report, a merger of the development unit “Quorum” of JPMorgan and ConsenSys could be in the offing.

Quorum forms the basis of JPMorgan’s Interbank Information Network (IIN), which has been expanded to a network of 320 banks that exchange global payment data via the block chain. The joint development of new block-chain-based products could therefore have far-reaching effects on the banking landscape in the United States.

The price of Bitcoin has fallen 3.72% in the last 24 hours to USD 9,223.36. It remains to be seen whether the cops can take over the helm.

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About Author

Collin is a Bitcoin investor of the early hour and a long-time trader in the crypto and forex market. He's fascinated by the complex possibilities of blockchain technology and tries to make matter accessible to everyone. His reports focus on developments about the technology for different cryptocurrencies.

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