Anticipation of January ETFs sparks surge in cryptocurrency option trading
Trading cryptocurrency options and futures has seen a noticeable increase since Christmas, driven primarily by traditional financial institutions. This surge is largely due to the anticipation of a crucial decision by U.S. regulatory authorities regarding the approval or disapproval of exchange-traded funds (ETFs) focused on direct investments in Bitcoin. Recent data from Bloomberg reveals that Bitcoin options trading has reached unprecedented levels, with Deribit, a leading platform in the crypto-options sphere, on the cusp of experiencing its largest quarterly expiry of options this Friday.
The expiring options, valued at approximately $11 billion, consist of $7.7 billion in Bitcoin (BTC) contracts and $3.5 billion in Ether options. Despite being the largest options expiry to date, its impact on spot market prices is expected to be moderate rather than significant.
The cryptocurrency market has made a significant recovery this year, with Bitcoin’s value increasing by almost 160%. This resurgence comes after a tumultuous period marked by various industry controversies in 2022 that negatively affected digital asset prices.
The current market rebound is partly fueled by the optimism surrounding the potential approval of spot Bitcoin ETFs, which could attract more investors to this asset category. Options contracts provide buyers with the right to buy or sell the underlying asset at a predetermined price within a specified timeframe.
Alongside the increase in cryptocurrency options trading, there has also been a rise in trading volumes for spot Bitcoin and its derivatives. This coincides with the entry of mainstream asset managers like BlackRock into the market, as evidenced by their filings for Bitcoin ETFs. This trend reflects a growing interest and acceptance of cryptocurrencies within traditional financial circles.
