Throughout 2019, the term “Alt-season” has been among the trends in the crypto space. However, crypto analysts predict that altcoin will suffer following the launching of Bitcoin options.
CME, one of the firsts regulated institutions to provide Bitcoin futures, is finally launching the options dedicated to Bitcoin futures contracts. The said launching will take place today, January 13, 2020.
Over the past few years, CME has been among the most influential firms in the crypto market. This fact makes most analysts speculate the effect of the BTC options launching to the crypto market as a whole.
Divergence of Altcoin
Before the launch of BTC options, the altcoin is already on its divergent performance in the crypto space.
The increased popularity of BTC derivatives trading, lack of institutional interest, and investment appetite are among the reasons why analysts predicted that altcoin-season is about to end this 2020.
Currently, BTC derivatives trading is one of the fastest-growing parts of the cryptocurrency market. Demand for swaps, options, and futures continue to rise among all client segments.
The derivative trading’s spectrum becomes wider due to the increased product selections, especially the Bitcoin options trading from CME. Then, the growing demand for derivative trading has been drawing the overall cryptocurrency investment needs away from the altcoin space, especially the institutional client group. As a result, the draw-away effect becomes more noticeable.
BTC Options Can Be Bearish for Altcoins
Crypto analyst and commentator Ceteris Paribus noted that the launch of BTC options could be bearish for altcoins. The Twitter post reads, “If it isn’t obvious, the more we see products like this get offered the more bearish it is for the majority of alts.”
Moreover, it was also noted that “99% of alts are basically quasi-derivatives of Bitcoin.” That statement suggests that the introduction of regulated trading derivatives may result in an erosion in the altcoin volume figures, leading to lower prices due to a lack of buying pressure and low liquidity.
Bitcoin as A Mainstream Financial Asset
Days ago, Nikolaos Panigirtzoglou, Managing Director of JP Morgan, has recently observed the huge anticipation for the launch of Bitcoin options contracts. He commented that “There has been a step increase in the activity of the underlying CME futures contract… This unusual strong activity over the past few days likely reflects the high anticipation among market participants of the option contract.”
Despite the speculations that the new trading derivative products offered by CME might be hurting altcoins, this will help the rise of BTC to become one of the mainstream financial assets.
According to crypto analysts, both the interest and anticipation of the institutions in BTC is bullish. Remember what the Coinbase CEO Brian Armstrong said, that the derivative products will introduce BTC into a broader investor base that may potentially hold more wealth compared to individual and retail investors.
In addition, research company Global Coin Research says, “We are also seeing an increasing amount of interest from institutional players which also indicates a more bullish market in 2020.”