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A new record for the market volume in Bitcoin options shows a strong institutional interest

July 7, 2020

A report from, CryptoCompare, released on July 6, closely examined monthly cryptocurrency market trends and found that the volume of crypto derivatives began to decline after the May peak. The volume of crypto derivatives declined 35.7% in June to $ 393 billion.

Historical monthly volume of derivatives

Historical monthly volume of derivatives. Source: CryptoCompare

A new record for the market volume in Bitcoin options shows a strong institutional interestA new record for the market volume in Bitcoin options shows a strong institutional interest

The general trend that has also been observed in the spot markets can be partly explained by the lack of volatility that Bitcoin and most crypto assets in the market are currently experiencing. There are some exceptions, such as DeFi tokens, that have significantly outperformed Bitcoin (BTC) in the past month.

Despite the decline in overall volume in the derivatives markets, regulated options seem to be gaining popularity. In June, the total volume of bitcoin options on the Chicago Mercantile Exchange (CME) rose 41%, reaching another monthly high of 8,444 contracts traded. Meanwhile, BTC futures traded on the CME declined 23% in June, which was still the second largest month in 2020.

Options in CME and volume of futures contracts

Options in CME and volume of futures contracts. Source: CryptoCompare

Other signs of institutionalization

While high volumes at the CME are a welcome sign for those who are patiently waiting for institutionalization to be the catalyst that is driving Bitcoin and other cryptocurrencies to new heights, there are other factors that indicate this possible change.

These trends are already evident in funds such as GBTC has over 80% institutional investor demographics and currently manages $ 4.1 billion in digital assets. Barry Silbert, CEO of GBTC Digital Currency Group, tweeted that the fund has experienced recently its biggest increase, although details are still unknown.

Companies that respond to institutional needs also rely on cryptocurrency and continue to consolidate this trend. For example, KPMG, one of the four largest accounting firms in the UK, launched a cryptocurrency management platform called “Chain Fusion”. In a recent company report, KPMG said:

“Institutionalization is the market share of small and large companies within the global financial ecosystem, including banks, brokers, exchanges, payment providers, fintech and service providers.”

How institutions can switch to cryptocurrencies

As the institutes continue to get interested in Bitcoin, this trend is likely to continue, which in turn can bring many general benefits to the market.

Institutional investors need safe and transparent trading venuesWhile a number of cryptocurrency exchanges are known to fake their trading volume, they wash the trade and worse.

Philip Gradwell, Chief economist of Chain analysisrecently said:

“If you want to make serious money with cryptocurrencies, you need to strengthen your confidence that there are indeed good trading venues […] If you are a stock exchange and have good incentives to report real volume, you could get institutional money, but if you don’t have those incentives, stay away. “

The shift from private investors to institutional investors, or at least a significant increase in their stake, can be a clear signal for the stock exchanges to change their behavior accordingly or to accept a gradual withdrawal.

These improvements could open the doors to the creation of the long-awaited Exchange Traded Bitcoin Fund (ETF) and other instruments that would undoubtedly attract more institutional investors to the cryptocurrency sector.