Bitcoin and ether options are experiencing significant growth in the market, with the combined notional open interest on Deribit, a leading exchange, surpassing $20 billion. This surge in interest indicates a greater level of market sophistication among investors. Today, Deribit will settle monthly options contracts for Bitcoin and ether, which are valued at several billion dollars. The crypto options market is clearly booming.
Notional Open Interest on Deribit
The current notional open interest of active Bitcoin and ether options contracts on Deribit is $20.64 billion, according to data from Laevitas. This figure is close to the peak reached in November 2021 when Bitcoin was trading above $66,000. It is worth noting that the current open interest is significantly higher than in November 2021.
Deribit’s chief commercial officer, Luuk Strijers, sees this milestone as a significant achievement for the exchange and a clear indicator of the overall market growth and increasing interest in options among their clients. Deribit currently controls 90% of the global crypto options activity.
Understanding Options
Options are derivative contracts that give the purchaser the right, but not the obligation, to buy or sell the underlying asset at a predetermined price on or before a specific date. Call options provide the right to buy, while put options offer the right to sell. A call buyer is bullish on the market, while a put buyer is bearish.
The record-breaking activity in the options market means that investors and market makers will have more influence on determining the spot market price. Market makers, who recently held a net short gamma exposure in Bitcoin, may have bought the top cryptocurrency to adjust their overall exposure back to neutral, inadvertently fueling the price rally. In the past two weeks, Bitcoin has gained 30% and is currently trading above $34,000.
Expiration of Bitcoin and Ether Options Contracts
Today, at 08:00 UTC, Bitcoin and ether options contracts worth $4.5 billion will expire on Deribit. Monthly and quarterly settlements like these typically inject volatility into the crypto market.
The majority of open interest in Bitcoin options is concentrated in in-the-money (ITM) calls, which are options with strike prices below the current market rate of Bitcoin. Traders have been buying these calls over the past two weeks as Bitcoin’s price rose from $27,000 to $35,000.
Luuk Strijers highlighted that the expiration of options worth $4.5 billion on Friday is significant, as a considerable percentage of these options are set to expire in the money due to recent market movements. This could potentially prompt some market action.
Market Growth and Increasing Interest in Options
The market for Bitcoin and ether options has seen significant growth, reflecting the broader market growth and increasing interest in options among investors. The combined notional open interest on Deribit surpassing $20 billion is a clear indicator of this trend.
As the market for Bitcoin and ether options continues to grow, it is expected that more investors will be attracted to this sophisticated investment instrument. The increasing interest in options is a positive sign for the overall health of the cryptocurrency market, as it indicates that investors are becoming more knowledgeable and are seeking more advanced investment strategies.
Conclusion
In summary, the market for Bitcoin and ether options is experiencing significant growth, with the combined notional open interest on Deribit surpassing $20 billion. This milestone reflects the broader market growth and increasing interest in options among investors. The expiration of options contracts worth $4.5 billion today could lead to further market activity. As the market continues to mature and evolve, it is likely that the interest in Bitcoin and ether options will continue to grow, providing investors with more sophisticated investment opportunities.
