According to the announcement, this Bakkt Bitcoin option was settled as a Bitcoin monthly futures contract two days before expiration. Galaxy Digital Trading and XBTO made their first transaction. A block transaction is defined as a single transaction that meets the required minimum limit, and the transaction is agreed upon between the buyer and seller through agreement and the transaction is confirmed by the exchange.
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The main difference between futures and options is that contract holders have an obligation to sell futures contracts on expiration. As for option contract holders, there is no obligation to sell the contract when the contract expires, which gives the option more flexibility and may affect market prices.
The announcement added that market pricing is completely regulated and not affected by the non-compliant bitcoin spot market, which may experience unusual price fluctuations.
Trabue Bland, president of ICE Futures in the United States, said:
"Based on our physical delivery of Bitcoin futures, these options contracts provide our customers with a new, capital-efficient tool for trading and managing volatility, price risk and revenue generation."
Josh Lim, head of trading strategy at Galaxy Digital Trading, said:
"We believe that the development of institutional market infrastructure will help digital assets achieve greater liquidity. The emergence of centrally cleared Bitcoin options on compliant U.S. exchanges is an important milestone in this market."
XBTO's head of trading Paul Eisma also commented:
"By launching bitcoin options on a large trading platform, ICE and Bakkt provide valuable tools for professional investors and business hedgers to properly manage risk in a rapidly maturing asset class. The XBTO looks forward to seeing more and more Of non-linear institutional trading products enter the digital asset market. "
It's not just Bakkt who is interested in Bitcoin options contracts. Earlier this month, the Chicago Mercantile Exchange (CME) detailed the BTC options contract to be launched on January 13.
Previously, such institutional investment products were considered bullish in the industry, but investor confidence in them has weakened in recent months.
Most people in the cryptocurrency community are not optimistic about futures contracts because they allow a lot of money to short this asset, which will have a ripple effect on the bitcoin market. Singapore ICE's latest bitcoin trading product is settled in cash and does nothing to bitcoin.
Since the first launch of Bitcoin futures in December 2017, the price of this underlying asset has plummeted by 65%.