"The price was slated to move up in general and the CME launch probably added fuel to it", said Vijay Ayyar, Singapore-based head of business development at crypto exchange Luno, referring to CME Group Inc. beginning to trade options on Bitcoin futures.
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 January 10.
Panigirtzoglou also went on to write that there has been an increase in the activity for the underlying CME futures contract over the past few days and that the open interest has increased 69% since the end of 2019, and also that the number of large open-interest holders has grown. The FAQ page for this product says that "upon termination of trading, in-the-money options, expire into 1 bitcoin futures contract which immediately cash settles to the CME CF Bitcoin Reference Rate (BRR)".
Indeed, one simple chart suggests that the strong growth in the contracts' open interest metric means the price of BTC will soon explode higher. Notably, the BTC contracts' volume is still far from all-time highs, but the growth in open interest is a positive sign.
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Separately, Bitcoin's intrinsic value has been rising, but remains below the market price following a significant divergence in the middle of a year ago, the report said.
Introduction of new Bitcoin contracts has a mixed track record. Now, it's to be seen how will the price react next week.
Bitcoin's price surge seems to have started around 23:55 (UTC) on January 13, approximately nine hours after the launch, when Bitcoin was trading at $8,106. JPMorgan calculates intrinsic value by treating Bitcoin as a commodity and looking at the marginal cost of production including computational power employed and cost of electricity.
Since last week, the price of Bitcoin has risen 15% and the volume, according to one report from a cryptocurrency research firm, has almost doubled, boding well for bulls if momentum can be maintained.