Demand for Bitcoin options is soaring, with average daily open interest on the Chicago Mercantile Exchange (CME) touching an all-time high of $1.9 billion as of December.

According to CoinGlass, the last high for CME open interest was in April at $1.68 billion, when the U.S. banking crisis a month prior sent Bitcoin (BTC) soaring to $30,000. Today, BTC trades for over $42,000, with markets eager about a highly expected approval of a Bitcoin spot ETF next month.

Bitcoin Options Open Interest. Source: CoinGlass

Options are financial derivatives that let owners purchase the opportunity to buy or sell an asset at a predetermined price at a later date. Options to buy are known as “calls,” and options to sell are known as “puts.”

Coinglass data shows that total open interest, which includes the more regulated CME and other high-volume exchanges, totals $19.6 billion worldwide. Of that interest, 64.5% is in call options, meaning options traders are feeling bullish in the short term.

On the whole, rising open interest signals a highly liquid Bitcoin market, especially involving activity from sophisticated traders. CME open interest is a stronger indicator of this since it reflects participation from institutions in the regulated U.S. marketplace.

Bitcoin’s Soaring Metrics

CME futures open interest has also soared over the past two months to 113,000 BTC (4.8 billion), comprising 26% of the total market. It has now dwarfed Binance as the world’s largest Bitcoin futures exchange following the latter’s $4 billion settlement with the DOJ and CFTC last month.

Similarly, the largest U.S. Bitcoin futures ETF, the ProShares Bitcoin Strategy ETF (BITO) surpassed its all-time high for assets under management late last month at over $1.47 billion. That’s yet another sign that institutions are hungry for Bitcoin exposure – especially ones that can’t buy BTC directly without a spot ETF.

Aside from ETFs, markets are also pricing in a 66% likelihood of interest rate cuts by the Federal Reserve in March, which is generally interpreted as bullish for Bitcoin.

The Bitcoin network’s transaction fees also reached all-time highs earlier this month due to a flood of Ordinals activity. Some analysts have taken high fees as a sign to buy up shares of publicly traded Bitcoin miners, who profit from all fees paid by the network’s users.

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