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  • Bitcoin options will be launched on several trading platforms within a month.
  • Experts take a measured approach to the new cryptocurrency-based tool.

Cryptocurrency enthusiasts are cautious about Bitcoin options launch as the market reaction may be unpredictable once they go mainstream.

Currently, Bitcoin options are available on Bakkt, a platform for physical Bitcoin futures trading operated by ICE (Intercontinental Exchange). The product was launched at the beginning of December. CME Group plans to launch its options on January 13. Also, OKEx, a popular exchange in Asia, is set to launch its Bitcoin options on December 27.

An option is a contract that allows a holder to buy or sell a specified amount of assets within a set period. Until now, cryptocurrency options trading was a niche thing available only for professional traders. According to derivatives tracker Skew, an average daily trading volume has settled around $22 million, which pales in comparison with $1 billion of daily trading volume of Bitcoin and about $10 billion for Bitcoin futures.  

However, it is hard to tell how it will pan out once the product goes mainstream.  

Tim McCourt, global head of equity index products at Chicago-based CME, said in the telephone interview with Bloomberg:

“It’s hard to say who exactly will show up on day one.”  

Notably, there was a lot of excitement about Bitcoin futures once they first appeared on CBOE in December 2017. The trading platform had to halt trading several times due to unexpectedly high trading volume. However, a year later, it stopped trading Bitcoin futures due to vanished demand.

Sam Bankman-Fried, a head of the cryptocurrency trader Alameda Research, shares the concerns:

“A lot of people are excited without knowing why exactly. Sometimes people go through a lot of work to list options, and there’s no one buying it.”

Options offer protection against volatility risk. Thus they may be useful for miners, hedge funds or so-called whales, people who hold lots of coins and don’t want or cannot sell them, Bankman-Fried added.