Record Options Trading Activity Propels Bitcoin (BTC) and Ethereum (ETH) to New Heights on Deribit

Options trading for Bitcoin (BTC) and Ethereum (ETH) on Deribit is experiencing unprecedented levels of activity.

As of the end of the week, the total value of open BTC and ETH options contracts, referred to as notional open interest, reached a record-breaking $23.6 billion, according to Deribit’s Chief Commercial Officer Luuk Strijers in a statement to CoinDesk.

Bitcoin options constituted 67% of this total, while Ether made up the remaining portion. Each options contract on Deribit represents a single unit of BTC and ETH.

Strijers revealed, “Deribit options notional open interest has reached a new all-time high with $16 billion in BTC options and $7.6 billion in ETH options outstanding, resulting in a total of $23.6 billion. When adding the $2.2 billion in perpetuals and futures OI, Deribit has, for the first time, reached the $25 billion milestone (total now $25.8B!).”

Options trading provides investors with the opportunity to make leveraged bets on the underlying asset and safeguard their exposure in spot/futures markets. Call options grant the right, though not the obligation, to buy the underlying asset at a predetermined price in the future, while put options grant the right to sell.

Unlike the one-dimensional focus on price direction in spot and futures markets, options trading is three-dimensional. Investors can speculate on the price movement’s direction, the expected degree of price volatility, and the time aspect. The surge in record options open interest signifies an influx of sophisticated traders into the cryptocurrency market, promising improved price discovery.

At present, the majority of open interest in Bitcoin and Ethereum options is concentrated in call options. For Bitcoin, notable concentrations include calls at $50,000, $40,000, and $45,000 strikes. In the case of Ethereum, calls at $2,300, $2,400, $2,500, and $3,000 are particularly popular.

The prevalence of call options aligns with the ongoing upward momentum in both cryptocurrencies, indicating expectations for continued positive movement.

Bitcoin recently surpassed the $44,000 mark, marking its highest point since April 2022. This surge is attributed to optimism surrounding ETFs and decreasing U.S. Treasury yields, contributing to a year-to-date gain of over 150% for the leading cryptocurrency.