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Options trading volume is said to have hit record highs ahead of Friday’s month-end, quarter-end and year-end expirations. The Block’s data dashboard.
Monthly options trading volume for the largest digital asset by market capitalization has reached an all-time high of over $38 billion across major cryptocurrency derivatives exchanges. This includes $26.7 billion in BTC options trading volume on Deribit and an increase in derivatives trading on OKX and Binance.
About $7.7 billion worth of options related to Bitcoin expired on Deribit on Friday, marking a significant milestone for the derivatives exchange. The majority of contracts still outstanding on Deribit are call options, which give the right, but not the obligation, to buy Bitcoin at a set price. Traders who buy call options implicitly assume that they are bullish on the market, while put buyers are assumed to be bearish.
There is a total of more than $11 billion worth of Bitcoin and Ethereum options outstanding ahead of expiration on Friday, according to Luuk Strijers, Deribit’s chief commercial officer. “This is Deribit’s largest maturity to date, with nearly $5 billion of it maturing in money,” Strijers told The Block.
Expiration date open interest on Deribit derivatives exchange.
‘The largest amount ever’
“This is also the highest amount ever and could potentially result in above-average hedging and trading activity. In addition to hedging, we expect to see clients rolling positions until the 2024 expiration date and we expect to see more on the expiration date and beyond. .After expiration, all eyes and trading activity will be focused on the upcoming ETF decision,” Strijers added.
Most of the calls expiring on Friday were for the $45,000 strike price, indicating that experienced traders expected the price of the digital asset to surpass that level by the end of the month. However, Bitcoin traded down to $42,900 at 7:45 a.m. ET, according to The Block’s price page.
CME Bitcoin options trading volume hits record high.
Monthly trading volume for Chicago Mercantile Exchange Bitcoin options also hit a record high, suggesting increased participation by sophisticated market participants. According to The Block’s data dashboard, CME Bitcoin options trading volume reached $2.39 billion with four days left in December. Open interest in CME Bitcoin options also surpassed an all-time high of $2 billion ahead of expiration on Friday.
Despite widespread optimism, one indicator suggests it is becoming increasingly difficult for derivatives traders to sustain their bullish bets. According to CryptoQuant’s weekly report, selling volume is currently growing more than buying volume in the Bitcoin futures market.
“Derivatives markets are seeing the highest funding rates for Bitcoin in over a year, meaning traders are paying too much to open long positions,” CryptoQuant analysts said. .
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