Bitcoin Options Activity Surges As BTC-Denominated OI Breaks Record
Data reveals the Bitcoin-denominated Options Open Interest has witnessed a pointy surge lately and set a brand new all-time high (ATH).
Bitcoin Options Trend Suggests Investors Repositioning Amid Downtrend
According to the most recent weekly report from Glassnode, the latest market volatility has introduced with it recent exercise on the options market. Options are one of many methods derivatives merchants wager on future Bitcoin value motion. An choices contract grants the investor the best (however not the duty) to purchase or promote the cryptocurrency at a set value on or earlier than a pre-set date. Bullish choices bets are often known as “calls,” whereas bearish ones as “places.”
In the previous, futures trading dominated the BTC derivatives market, however in latest occasions, choices have gained recognition and now rival futures when it comes to the Open Interest.
The Open Interest right here refers to an indicator that measures the whole quantity of positions associated to a given market which might be open on all centralized exchanges. Below is the chart for this metric shared by Glassnode within the report that reveals the pattern in its BTC-denominated worth for the choices market over the previous yr.
As is seen within the graph, the Bitcoin Options Open Interest has shot up lately, indicating that choices merchants have been opening new positions. This surge in exercise has come as BTC’s spot value has gone by some sharp volatility. The rise within the indicator has been so sturdy that it has pushed its worth to a brand new ATH. Glassnode famous that this can be a results of “a mix of volatility-arbitrage methods and renewed demand for danger administration.”
While the Options Open Interest denominated in BTC has spiked, the identical hasn’t been true for the USD model, which stays properly beneath the height witnessed in late-October.
That mentioned, the rise within the BTC-denominated metric continues to be an indication that traders have been repositioning, even when the general USD capital concerned is decrease. “This units the stage for the upcoming key expiry, which is shaping as much as be probably the most vital within the close to time period,” defined the analytics agency.
Like the USD-denominated Options Open Interest, the indicator for the perpetual futures market has additionally seen a decline lately.
As displayed within the above chart, the Bitcoin Futures Open Interest has been following a gradual and regular decline for the reason that huge deleveraging occasion in October. The tempo of the decline signifies traders themselves have been pulling again on danger, somewhat than going through forceful liquidations.
The report concluded:
The market now rests on a leaner leverage base, which lowers the percentages of sharp, liquidation-driven volatility and displays a extra cautious, defensive positioning throughout futures markets.
BTC Price
Bitcoin has returned to $91,300 following its sharp 5% surge over the previous day.
