A spike in the demand for crypto derivatives signals a shift in investor strategies within the crypto landscape. Bitcoin options have seen a surge in interest, primarily from traditional investors.
Yet, the recent options expiration didn’t stir the anticipated market volatility. However, optimism has been mounting around the possible approval of spot Bitcoin exchange-traded funds (ETFs), driving significant interest and trading volumes in both spots Bitcoin and its derivatives.
Cryptocurrency prices have soared this year, prompting a notable surge in demand for digital asset derivatives, especially options and futures. This demand is led by traditional institutional investors gearing up for the imminent decision by US regulators on whether to greenlight or reject these spot BTC ETF proposals.
Record-Breaking Bitcoin Options Trading
Recent on-chain data shows an all-time high in Bitcoin options trading volumes. For instance, Deribit, the largest crypto-options exchange, experienced its largest quarterly expiry ever, with options valued at $11 billion expiring, including $7.7 billion in Bitcoin contracts and $3.5 billion in Ether options.
Despite high expectations, the recent Bitcoin options expiry didn’t bring the anticipated market volatility, leaving market participants eagerly awaiting the US SEC’s verdict on Bitcoin spot ETFs, anticipated to wield significant influence over crypto prices.
Crypto Market’s Recovery
The crypto market’s remarkable recovery in 2023 is partly due to the growing hopes for the approval of Bitcoin spot ETFs, causing institutional investments. Accordingly, trading volumes for spot Bitcoin and its derivatives have surged in recent months, particularly in perpetual futures.
While attention is on spot Bitcoin prices, the derivatives market is a pivotal gauge for investor sentiment and risk management in the rapidly evolving crypto space.
BlackRock And Valkyrie Choose JP Morgan, Others As Authorized Participants
In recent filings, two prominent asset managers seeking a spot Bitcoin ETF approval, BlackRock and Valkyrie, have revealed their chosen Authorized Participants (AP), signaling their compliance with the US regulator’s requirements.
BlackRock disclosed that it would collaborate with JP Morgan and quantitative trading firm Jane Street. Likewise, Valkyrie named Jane Street and Cantor Fitzgerald its authorized participants in a separate filing, showcasing a diverse selection of entities involved in the potential ETF process.
The disclosure was part of the updated S-1 forms submitted to the US SEC on the deadline for proposal submissions. Interestingly, BlackRock’s inclusion of JP Morgan drew attention to CEO Jamie Dimon’s prior strong disapproval of Bitcoin and the broader crypto sector as an asset category.
As anticipation builds, the SEC will deliberate on approving a spot Bitcoin ETF between January 5 and 10.
JPMorgan CEO’s Crypto Aversion Continues
Even though JPMorgan Bank extensively employs blockchain technology, the firm’s CEO remains a vocal critic of cryptocurrencies. Dimon highlighted concerns about the crypto industry’s ability to swiftly move money without adhering to regulatory frameworks as it is for traditional financial institutions.
He emphasized that the absence of necessary oversight mechanisms like sanctions and anti-money laundering controls could facilitate illicit activities. Senator Elizabeth Warren aligned with Dimon on the need for crypto businesses to comply with anti-money laundering regulations like traditional financial entities.
Despite Dimon’s hardline stance against cryptocurrencies, JPMorgan’s blockchain-powered JPM Coin moves up to $1 billion daily. Also, its Onyx division explores integrating traditional finance with blockchain systems.
