Bitcoin Options Trading Hits All-Time High

According to a Data Dashboard, Bitcoin BTC -0.69% options trading volume has attained an all-time high before Friday’s end-of-month, quarterly, and annual expiration dates.

The monthly options trading volume on major cryptocurrency derivatives exchanges for the most significant digital asset by market capitalization has surpassed $38 billion, a record high.

This includes increased derivatives trading on OKX and Binance and a $26.7 billion volume of BTC options trading on Deribit.

Approximately $7.7 billion worth of bitcoin-related options will expire on Deribit on Friday, representing a momentous achievement for the derivatives exchange.

Outstanding contracts on Deribit predominantly consist of calls, which grant the right to purchase Bitcoin at a predetermined price without imposing any obligation. A buyer of call options is presumed to be implicitly bullish on the market, whereas a put option buyer is considered bearish.

Luuk Strijers, chief commercial officer of Deribit, estimates that the combined open interest for bitcoin and ether options exceeded $11 billion before Friday’s expiration.

Strijers stated, “This is the highest expiration of Deribit to date, with nearly $5 billion expiring in the money.”

“Additionally, this is the largest sum ever, which may lead to greater-than-usual hedging and trading activity.” In addition to hedging, we observe clients shifting positions to 2024 expirations, and we anticipate seeing an increase in this practice both before and after the expiration.

Strijers added, “After the expiration, all attention and trading activity will be directed toward the forthcoming ETF decision.”

A significant proportion of calls that expire on Friday are set for a strike price of $45,000. This suggests that seasoned traders had predicted that the digital asset’s cost would exceed that threshold by the conclusion of the month.

Nonetheless, bitcoin experienced a decline in value and was trading at $42,900 at 7:45 a.m. ET.

Additionally, the monthly trading volume of Bitcoin options on the Chicago Mercantile Exchange has reached an all-time high, indicating that more sophisticated market participants are participating. With four days remaining in December, the volume of CME Bitcoin options trading reached $2.39 billion, as reported by a data dashboard.

More than $2 billion in open interest on CME bitcoin options has also peaked before the expiration date on Friday.

A metric indicates that favorable wagers by derivatives traders are becoming more challenging to maintain despite widespread optimism. The weekly report from CryptoQuant shows that sell volume is increasing faster than purchase volume in Bitcoin futures markets.

Analysts at CryptoQuant stated, “The derivative markets are exhibiting the highest funding rates for bitcoin in over a year, which means that traders are paying an excessive amount to initiate long positions.”