CME’s crypto derivatives reach new highs as traders seek safe port in storm

Derivatives trading giant CME Group has clocked a record high in volume and open interest for bitcoin options as traders flock to the venue in the wake of the FTX meltdown.

Bitcoin options volumes on CME hit $1.1 billion on Tuesday, and more than $736 million in open interest, according to data from The Block Research.

Caution among institutional trading firms in the wake of Sam Bankman-Fried’s FTX bankruptcy could be one force behind the surge in activity on CME, said Steven Zheng, research director at The Block Research.

CME Group, which launched bitcoin futures in May 2021, offers crypto trading in options and futures in bitcoin and ether.

Given the collapse of FTX, Zheng said, institutional crypto traders are a lot more cautious of trading on unregulated and semi-regulated platforms, adding that «CME appears to be the beneficiary of this cautiousness.»

That’s supported by other traders who spoke with The Block, including one options traders who requested anonymity and said: «Counterparty risk def a big fear for institutional traders — CME is obviously trusted.»

«Prediction long-term would be that some traditional exchange ends up getting majority of volume, but Deribit still [is] the monster in the space by a lot currently,» he added.

In general, crypto options are a more popular trading product for institutional investors than they are for retail investors, especially compared with crypto futures products.

Zheng said this preference might help explain why CME’s crypto options are up while its futures products are not.

Disclaimer: Beginning in 2021, Michael McCaffrey, the former CEO and majority owner of The Block, took a series of loans from founder and former FTX and Alameda CEO Sam Bankman-Fried. McCaffrey resigned from the company in December 2022 after failing to disclose those transactions.

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