JP Morgan Exploring Bitcoin Options

Heavyweight investment bank is keeping a close eye on bitcoin's derivative market

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February 26, 2020 Investment bank JP Morgan is keeping a close eye on the bitcoin options market.  The financial services giant has released a 74-page report on cryptocurrencies, which talks about genuine demand for non-linear institutional trading products in crypto markets.  While institutional participation in the bitcoin market is increasing, broader adoption remains weak due to price volatility, the report mentions, while adding that crypto market volatility is about five times greater than core markets like equities or commodities.  Interestingly, volatility is what makes option trading attractive. An option contract is an agreement between a buyer and seller that gives the the former the right but not the obligation to buy or sell a particular asset at a later date at an agreed upon price.  A call options gives the right to buy, while a put option gives the right to sell. Volatility has a positive impact on options price.  Options are cheap in a low-volatility environment. Hence, traders prefer to buy options when volatility is very low and write or sell options when volatility rises to extremes.  Currently, Deribit, Chicago Mercantile Exchange and Bakkt are offering options on bitcoin. The combined option open interest at Deribit/LedgerX is decent at around $500 million, in dollar terms around half of the futures open interest at Bitmex and CME combined, as noted by JP Morgan.  The investment bank's report also discusses how stablecoins such as Facebook's Libra and blockchain's might be used in banking.  Drops Below 200-day MA BTC: Price: $8,700 | Market cap: $159 billion | 24-Hr Volume: $44.67 billion Trend: Bearish Bitcoin is flashing red at press time, having suffered a head-and-shoulders breakdown on Tuesday.  The cryptocurrency is currently trading under the 200-day average at $8,786. The long-term average has been breached for the first time since Jan. 27.  The 14-day relative strength index is hovering at 36.00, meaning there is room for further sell-off toward the support level at $8,213 (Jan. 24 low).  However, the indicators on the hourly and 4-hour charts are now reporting oversold conditions. So, a bounce to $9,000 cannot be ruled out.  Read Analysis Bitcoin Is in the 3rd Phase of the Journey Followed by Any Revolution That Eventually Triumphs (Medium) By successfully passing this stage, bitcoin will then be in a position to triumph. MoneyGram Got Another $11M From Ripple to Use Its Cross-Border Payments Tech (CoinDesk)  Ripple has given MoneyGram over $11 million dollars in the past half year, according to regulatory filings with the Securities and Exchange Commission. The Biggest Threat To Bitcoin Is Back On Track​​​​​​​ (Forbes) When social media giant Facebook revealed it would this year release its answer to bitcoin the crypto community was stunned. Bitcoin’s Newly Touted Haven Status Takes a Hit This Week​​​​​​​ (Bloomberg) Bitcoin’s quickly shedding its recent designation by some advocates as a haven asset. Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments. Copyright © 2020 CoinDesk, All rights reserved.  Our mailing address is:  250 Park Avenue South New York, NY, 10003, US  Want to change how you receive these emails? You can update your preferences or unsubscribe from this list