Derivatives exchange Deribit is the first to integrate FalconX’s Prime Connect.
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$9.5 Billion In Bitcoin Options Poised To Expire This Friday: Market Turbulence Ahead?
This Friday, the spotlight is turned to Deribit, the leading crypto derivatives exchange, as it gears up for a notable event in its trading history. Particularly, the exchange is poised to witness the expiration of over $9.5 billion in Bitcoin options open interest.
For context, Open interest refers to the total number of outstanding derivative contracts, such as futures or options, that have not been settled or closed. It represents the number of contracts market participants hold at the end of each trading day.
This surge in open interest recorded by Deribit reflects increased market participation and signals heightened liquidity, marking a notable milestone in the crypto derivatives landscape.
Record-Breaking Open Interest
Notably, this event is significant in two ways: It underscores the growing interest in Bitcoin as an asset class and highlights the increasing “sophistication” of the cryptocurrency market. This is because Open interest can also serve as a critical indicator of market health and trader sentiment.
As such, the record levels of open interest set to expire on Deribit suggest a “vibrant” trading environment, with more investors engaging in complex financial instruments like options.
According to Deribit data, the exchange is set to host one of its largest option expiries ever, with $9.5 billion worth of Bitcoin options poised for expiry at the end of the month. This figure represents a substantial portion, approximately 40%, of the exchange’s total options open interest, which stands at $26.3 billion.
The magnitude of this expiry event eclipses previous months, with January and February end-of-month expiries totaling $3.74 billion and $3.72 billion, respectively. This trend indicates a large increase in market activity and investor engagement on the platform.
Implications Of The Bitcoin Expiry
The upcoming expiry has notable implications for the market, especially considering the current pricing dynamics of Bitcoin.
With Bitcoin’s spot price hovering below $70,000, an estimated $3.9 billion of the open interest is expected to expire “in the money,” according to Deribit analysts, presenting profitable opportunities for holders of these options contracts.
The “max pain” price, which represents the strike price at which the highest number of options would expire worthless, thereby causing the maximum financial loss to option holders, is identified at $50,000.
According to the analysts, this scenario suggests that a significant number of traders are positioned to benefit from the current market conditions, potentially leading to “increased buying activity” as these options are exercised.
Additionally, Deribit analysts speculate that the high level of “in-the-money expiries” could exert upward pressure on Bitcoin’s price or amplify market volatility. They added that as traders “hedge their positions” or “speculate on future price movements,” the market may witness a flurry of activity, impacting Bitcoin’s price trajectory in the short term.
This comes at a time when Bitcoin has experienced a slight retracement from its recent all-time high above $73,000, with the price adjusting to approximately $68,946, at the time of writing
Featured image from Unsplash, Chart from TradingView
Bitcoin Traders Seek Protection From Price Declines as ETF Deadline Looms: Deribit
Puts are overbought and calls [are] being sold, Deribit’s CCO Luuk Strijers told CoinDesk, noting the decline in the bitcoin implied volatility index.
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Professional Bitcoin traders were unaffected by the recent 9.6% price correction, and derivatives data reflects a healthy market.
A Record $11B Crypto Options Expiry Looms as BTC Shows Little Volatility
The expiry is Deribit’s largest so far and a record of almost $5 billion of options will expire in the money.
Bitcoin derivatives data points to traders' $50K BTC price target
Bitcoin bulls expectations of $50,000 and higher remain feasible according to BTC futures and options markets.
Bitcoin derivatives data points to traders' $50K BTC price target
Bitcoin bulls expectations of $50,000 and higher remain feasible according to BTC futures and options markets.
Bitcoin options data shows whales betting big — Will $50K BTC come in January?
Institutional investor interest soars as Bitcoin options open interest hits record high.
Bitcoin’s Bullish Surge Ahead: Deribit Predicts Major Price Leap In Early 2024
A recent analysis by Deribit, a leading derivatives exchange, suggests a bullish sentiment for Bitcoin as we approach early 2024. This optimism is rooted in the current Bitcoin put-call options ratio, a critical option market metric.
Deribit’s Insight: Bitcoin Calls Outpace Puts Signaling Market Confidence
Notably, options are financial instruments that give traders the right, but not the obligation, to buy (call options) or sell (put options) an underlying asset at a specified price within a set time frame. The put-call ratio is used in options trading to measure market sentiment.
A put option signifies a bet on the price of an asset falling, while a call option represents a wager on its rise. A lower put-call ratio indicates that more traders are betting on the asset’s price increasing rather than decreasing.
Deribit’s analysis shows an increasing trend in the number of call options outstripping put options in Bitcoin’s options market. Luuk Strijers, Chief Commercial Officer at Deribit, highlighted that the put-call ratio for Bitcoin has consistently hovered “between 0.4 and 0.5” throughout the year.
This trend is particularly noticeable for options expiring in March and June 2024, suggesting that investors are increasingly using call options to position for a potential appreciation in Bitcoin’s value during this period.
The put-call options ratio falling below one is a bullish market indicator, as it shows that call volume, or bets on the price increase, surpasses the put volume, which are bets on the price decrease. According to Deribt, Bitcoin’s put-call ratio currently stands at 0.42, as of today.
A Surge In Crypto Derivatives Activity
Meanwhile, November has seen significant activity in the crypto derivatives market, as noted by Strijers. The Deribit executive attributes this increased market activity to higher levels of “implied volatility (DVOL),” which have spurred “opportunities and overall market volumes.”
The expiration dates of the upcoming options, especially the significant one on December 29, are expected to maintain the heightened interest and activity in the market. With $5.7 billion in Bitcoin options and $2.7 billion in Ethereum options set to expire at the end of December, the market is poised for notable movements.
Bitcoin maintains its upward momentum, advancing by 1.8% over the past 24 hours. With Bitcoin currently trading at $38,344, the asset has sustained the gains achieved at the close of the previous month.
Bitcoin’s trading volume significantly reflects heightened market activity, suggesting ongoing buying pressure. In just the last day, trading volumes have surged from around $11 billion earlier in the week to over $21 billion, a noteworthy indication of increasing investor engagement.
Featured image from Unsplash, Chart from TradingView
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Open interest on Bitcoin options recently hit a year-to-date high, but what is fueling this newfound bullish sentiment?
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Analyst Points Out Weird Bitcoin Activity On Bybit & Deribit Before Flash Surge
An analyst has pointed out how some suspicious Bitcoin buying activity took place on Bybit and Deribit in the leadup to yesterday’s flash surge.
Bitcoin Taker Buy Sell Ratio Saw Extraordinary Spikes On Bybit & Deribit Yesterday
In a new post on X, Julio Moreno, head of research at CryptoQuant, discussed how the BTC taker buy-sell ratio looked like for the different exchanges in the market leading up to the surprise rally yesterday.
The “taker buy sell ratio” here refers to an indicator that keeps track of the ratio between the taker buy and taker sell volumes for Bitcoin on any given exchange (or group of platforms).
When the value of this metric is greater than 1, it means that the taker buy volume is more than the sell volume currently. Such a trend suggests that the investors are willing to pay more to purchase the asset and thus, a bullish sentiment is shared by the majority.
On the other hand, a value under the threshold implies a bearish mentality is active on the exchange as the traders are willing to sell the asset at a lower price at the moment.
Now, here is a chart that shows the trend in the 24-day simple moving average (SMA) Bitcoin taker buy-sell ratio over the past few days for four exchanges: Binance, OKX, Bybit, and Deribit.
Yesterday, Bitcoin saw a very sharp sudden rally as false news broke out that the iShares BTC spot ETF had been approved by the US SEC. This surge, however, retraced in as spectacular a fashion as it had occurred as the market quickly realized that the rumor was without any substance.
From the chart, it’s visible that all four of these exchanges saw spikes in the taker buy-sell ratio in the hours leading up to this rally. The spikes on Binance and OKX, though, were of pretty normal levels, as spikes of similar scales had occurred in the preceding days as well.
In the case of Bybit and Deribit, however, the 24-day SMA of the ratio had hit peaks of 41 and 98, respectively, which are both extremely high levels. For comparison, the indicator only hit 1.8 on Binance and 6.3 on OKX.
This would suggest that some really high Bitcoin buying volume was observed on Bybit and Deribit, which was unlike what was seen on other exchanges in the sector.
It’s unclear what this pattern means, but it’s possible that some users on these platforms had already been tipped on the fake announcement in advance.
BTC Price
Regardless of the quick rally and crash, Bitcoin has enjoyed some upward momentum during the past couple of days as the cryptocurrency’s value has now climbed toward the $28,500 level.
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XRP Options To Debut On Deribit: A Game-Changer For Price
The rapidly evolving crypto market is set to witness yet another milestone as Deribit, the world’s preeminent crypto options exchange, prepares to launch options contracts for XRP, Solana (SOL), and Polygon (MATIC). Given the dominating position of Deribit in the options sphere, this inclusion could have noteworthy ramifications on the pricing dynamics of XRP.
Deribit To Debut XRP Options
Deribit, having established itself as the leading crypto options exchange both in terms of trading volume and open interest, is not letting the recent dip in digital-asset volatility deter its expansion endeavors. As reported by Bloomberg, the exchange is poised to roll out options contracts for the XRP token in January.
This move, announced by Chief Commercial Officer Luuk Strijers, will augment the platform’s offering which until now has been focused mainly on Bitcoin, Ether, and USD Coin options. The choice might be influenced by financial interests and prevailing market conditions. Trading volumes for crypto derivatives declined to roughly $1.5 trillion in September, down from about $2 trillion earlier in the year, affected by reduced prices and volatility relative to the highs of 2021.
Further solidifying its strategic vision, Deribit is not just limiting itself to options expansion. The Panama-based giant has disclosed plans to transition its operations to Dubai, a more crypto-receptive jurisdiction, following the attainment of necessary licensing. Parallel to this, the firm intends to bolster its workforce by approximately a dozen, adding to its current roster of 115.
Strijers expressed the inherent challenges in timing new product launches given the current market sentiment. “Is this the best environment to launch new products or should we defer?” he reflected, but remained optimistic about potential volatility upticks post the January launch.
Impact On The Price
With an overwhelming 85% market share in options trading, the influence of Deribit is unmistakable. The rest of the market is shared by competitors like OKX, Binance, and Bybit. A considerable 85% of the volume flowing through Deribit originates from institutional clientele. Therefore, the addition of XRP options on such a dominant platform is inevitably going to steer substantial attention toward XRP’s pricing dynamics.
Options, by design, provide traders the privilege (without an obligation) to buy or sell the underlying asset at a preset price until a specific date. This can have multifaceted implications for the underlying asset. XRP, as it gets intertwined with the options mechanism, might witness higher short-term volatility in its pricing, particularly around the expiry of these contracts.
“Quarterly expiries are typically the most significant, in terms of volume and value,” highlighted Strijers in a recent discourse. Drawing parallels with Bitcoin, it’s plausible that XRP might undergo amplified volatility as these options contracts approach their expiration, especially at quarter-end, depending on the volume of XRP options being traded.
Conclusively, with Deribit’s unassailable stature in the options space and the inherent nature of options contracts, the induction of XRP options might very well become a pivotal point in XRP’s pricing journey. Traders, especially those engaged in XRP, will need to brace themselves for the nuanced challenges and opportunities this integration brings forth.
At press time, XRP was trading at $0.4994 after briefly falling to $0.4880.
