Strong activity registered in BTC futures before the options launch on Jan. 13Bitcoin’s intrinsic value is still below BTC price, says JPMorgan’s strategist Nikolaos Panigirtzoglou
According to JPMorgan Chase, institutional interest in Bitcoin-related contract is building up and there is high anticipation for the upcoming launch of CME Group’s options on Jan. 13.
Intercontinental exchange’s Bakkt has already launched options last month but the volumes and open interest on them have been “rather small,” wrote JPMorgan’s strategists led by Nikolaos Panigirtzoglou in a note on Jan. 10.
CME #Bitcoin #options will launch next week with trading beginning at 6pm ET Sunday night (Jan 12th). These are the specs. (FYI) pic.twitter.com/zU5wKYKEyC
— Gabor Gurbacs (@gaborgurbacs) January 7, 2020
Given CME’s dominance in trading Bitcoin futures on regulated exchanges, it is expected this new offering may change things.
In the past few days, “there has been a step increase in the activity of the underlying CME futures contract” as the open interest on CME futures contracts has increased 69% from year-end. The number of large open-interest holders has also grown.
“This unusually strong activity over the past few days likely ref lects the high anticipation among market participants of the option contract,” Panigirtzoglou wrote.
The introduction of bitcoin futures for the first time in December 2017 by CME itself led BTC price to top out at about $20,000. When ICE debuted its physically settled futures contracts, Bakkt in Sept. the prices fell that time too. Now, it’s to be seen how will the price react next week.
Currently, BTC/USD is trading at $8,165 with 24 hours gains of 2.27%, as per Coincodex.
But although Bitcoin’s intrinsic value has been rising, it is still below the market price. JPMorgan calculates the intrinsic value of BTC by treating the world’s leading cryptocurrency as a commodity and taking its marginal cost of production into account.
“The market price has declined by nearly 40% from its peak while the intrinsic value has risen by around 10%,” Panigirtzoglou wrote. But “the gap has not yet fully closed, suggesting some downside risk remains.”