Bitcoin Options Open Interest on CME Reaches All-Time High
The options open interest on the Chicago Mercantile Exchange (CME) for Bitcoin has hit a record high, reaching almost $2 billion in outstanding contracts. This indicates a highly liquid market with many participants and suggests an increase in sophisticated trader activity. Open interest refers to the total number of outstanding options contracts that have not been exercised.
Call Options Outweigh Put Options
Data from Coinglass shows that the options open interest is skewed towards call options rather than put options for the end of December expiry date, with 65% calls compared to 35% puts. A higher volume of calls compared to puts is seen as a bullish indicator.
Bitcoin Futures Traders Betting on Rate Cuts in 2024
Options on CME bitcoin futures expire on the same day as the underlying bitcoin futures contract, which is the last Friday of the month. Traders in the futures market are increasing bets on rate cuts, speculating a reduction in the benchmark interest rate as early as March 2024. Bitfinex analysts believe there will be a further decline over the next year.
This forecast aligns with data from the CME FedWatch tool, which suggests a 66.7% probability of the U.S. central bank cutting rates by 25 basis points in March 2024.
Hot Take: Bitcoin Options Market Signals Bullish Sentiment
The surge in Bitcoin options open interest on the CME indicates growing confidence and participation among traders. With record-high open interest and a higher volume of call options, it suggests a bullish sentiment towards Bitcoin’s future price movement. Additionally, traders betting on rate cuts in 2024 further reflect positive expectations for Bitcoin’s long-term performance. As the options market continues to grow and mature, it provides valuable insights into market sentiment and potential price trends.
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