On Tuesday (January 14), which coincides with “New Year’s Day” (better known as “Old New Year”) according to the Russian Orthodox Church (which uses the Julian calendar), Bitcoin celebrated by surging 5.5% to $8,551, which is the highest level it has been since 14 November 2019.
Bitcoin’s jump in price came just hours after CME Group (aka “CME”) launched its latest Bitcoin product: options on Bitcoin futures contracts.
CME’s launch occurred at 10:00 (CT) or 15:00 (UTC) on Monday (January 13).
As you can see in the 24-hour BTC-USD price chart below from CryptoCompare, Bitcoin’s price did not get an immediate boost, presumably because most Bitcoin derivatives trading occurs in South-East Asia and trading in CME’s options on Bitcoin futures started at 23:00 Hong Kong time:
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. Within less than five hours, Bitcoin had raced to $8,551, which is the highest level it has been in two months, as you can see from the three-month BTC-USD price chart shown below:
As Tim McCourt, a Managing Director at CME Group and CME Group’s Global Head of Equity Products, explained in a LinkedIn post on January 13, these new option contracts “give the buyer the right to buy or sell one CME Bitcoin futures contract (equal to five bitcoin) at a predetermined price on a given date in the future.” 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).” These options are “available to trade on CME Globex as well as via ex-pit transactions on CME Clearport.”
According to the latest trading activity report by CME Group, 55 “Options on Bitcoin Futures” contracts (which corresponds to 55 Bitcoin Futures contracts, or 275 bitcoins since each Bitcoin futures contract represents five bitcoins) worth approximately $2.3 million were traded between 10:00 (CT) and 16:00 (CT) on January 13:
Prominent crypto analyst and trader Josh Rager, who is also a Co-Founder of online crypto learning platform Blockroots, had this to say about Bitcoin’s most recent price action:
Looks good
$7900s acted as support at the previous range in Sept-Oct 2019 & is currently acting as support now as the POC (point of control since May)
Test of $8750 should be next, test and close above should rip up to $9050+
If price breaks down, $7900s is support pic.twitter.com/yuf8G9yaPl
— Josh Rager 📈 (@Josh_Rager) January 14, 2020
Featured Image Credit: Photo via Pexels.com. Table Courtesy of CME Group
