Ryze Recap 6/9: Bitcoin Derivatives Volume Makes New Highs
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It’s Tuesday, June 9th. We’ve got one quick story today about Bitcoin derivatives products. Not sure what this means? Don’t worry, we’ve got you covered.
The basics:
Derivatives are financial contracts such as futures, options, and swaps. The value of these products is derived from the price of an underlying asset, such as a stock, or Bitcoin. In simple terms, most of these products are bets on an underlying asset to go up or down, sometimes in a certain time frame.
Regulated Bitcoin derivatives products are offered in the US mainly through the CME (Chicago Mercantile Exchange), which mainly serves institutional investors.
Bitcoin Derivatives Volume Surpasses All-Time Highs
Volume among regulated Bitcoin derivatives products is at an all-time high. Derivatives volume across all crypto-assets increased by 32% to reach $602 Billion in May.
Bitcoin options contract volume on the CME, a regulated exchange serving institutions, reached an all-time high as well.
Why it matters:
Derivatives products are popular among institutional investors, who seem to be rushing into Bitcoin at unprecedented rates, as we recently covered on 5/28 and 6/1. Institutions use derivatives to hedge and control risk, as well as to gain exposure to an asset without owning the underlying asset.
The bulk of derivatives growth in recent months has been on heavily regulated exchanges, such as the CME, which have much larger contract sizes than consumer-focused exchanges. This further indicates that institutions are indeed getting more and more involved in Bitcoin.
That’s all for today! We’ll be back tomorrow with another Ryze Recap.
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