Ethereum Options

Bitcoin and Ethereum Options Market Breaks Records

October 27, 2023 by Lipika Deka

The options markets for both Bitcoin and Ethereum are experiencing a significant boom, spurred by positive developments in the spot BTC events. According to Laevitas, a prominent data analytics platform, there has been a substantial increase in the notional open interest of active BTC and ether options contracts on Deribit, the world’s largest options exchange, surpassing a remarkable $20 billion. This surge exceeded the previous peak noted on November 9, 2021, when Bitcoin was trading at an impressive $66,000, indicating a substantial 90% increase from the current market rate of $34,170.

Options are intricate derivative contracts that provide buyers with the right, though not the obligation, to buy or sell the underlying asset at a predetermined price before a specific date. In the context of Bitcoin options, a call option provides the right to buy, signifying a bullish stance, while a put option grants the right to sell, indicating a bearish perspective.

Analysts have observed that options trading typically attracts a more professional audience in comparison to futures trading, resulting in fewer retail investors engaging in this segment of the crypto market. This surge in options market activity suggests that the flows associated with investors and market makers will wield significant influence in determining the spot market price.

Crucially, recent reports have indicated that market makers have maintained a net short-gamma exposure to Bitcoin [ how sensitive an option’s price is to changes in the price of the underlying asset]. To balance their overall exposure, they may have acquired the flagship crypto, inadvertently fueling the ongoing price rally. Over the past fortnight, Bitcoin has experienced a remarkable surge of 30%, reaching a trading value exceeding $34,000.

Bitcoin’s Rally Sparks Short Squeeze Frenzy

The week commenced on a robust note, with Bitcoin’s price surpassing $35,000 on October 24. Bradley Duke, Chief Strategy Officer at ETC Group, suggested that this activity triggered a wave of large leveraged short positions, leading to a short squeeze—where short sellers collectively closed out their positions. “Only time will reveal if this rally is sustainable, but it appears that enthusiasm for Bitcoin is making a comeback,” he remarked.

Conversely, open interest for Bitcoin futures initially receded due to these liquidations, resulting in a market value reduction of approximately $1 billion. However, this decline has since reversed, indicating the opening of new contracts post-rally, as noted by Aditya Jalan, APAC Trading Manager at FalconX. This dynamic market movement suggests an evolving landscape for cryptocurrency, with both professional investors and retail traders closely monitoring the ongoing developments.

Ethereum Clinches Huge Chunk Of Deribit’s $98B Monthly Notional Turnover

May 6, 2021 by Chayanika Deka

Derivatives platform, Deribit’s latest report shows how Ethereum [ETH] has been outpacing Bitcoin [BTC] this bull season.

In the beginning, Ethereum took time to rally beyond significant resistance points, however, upon catching up, the crypto-asset broke several records not just in the spot market, but also in the derivatives realm.

In the latest development, the trading volume of Ether options has exceeded that of Bitcoin’s for the first time ever on the popular derivatives platform, Deribit. In its most recent newsletter, the platform revealed hitting a new ATH of a whopping $98 billion monthly notional turnover, a major chunk of which $23.8 billion on ETH.

ETH1 — Ethereum Clinches Huge Chunk Of Deribit's $98B Monthly Notional Turnover 6

Ethereum’s Trading Activity Intensifies On Deribit

According to the document, the derivatives market has witnessed the potential of the altcoin with a new record of $1.4 billion ETH options notional turnover traded on the 3rd of May as it surpassed not only BTC options but also BTC futures.

In addition, the open interest [OI] on ETH options contracts has also soared to a new height of $5 billion or 33% of the total open interest on all options contracts on Deribit.

Ethereum Clinches Huge Chunk Of Deribit's $98B Monthly Notional Turnover 7

In terms of monthly turnover, the exchange also mentioned that 3,416,558 ETH options contracts were traded in April 2021, and the figure was up by 47% versus March 2021. On the other hand, Deribit traded 586,460 BTC options contracts during the same time frame, and this figure surged by more than 8% versus the previous month.

ETH2 — Ethereum Clinches Huge Chunk Of Deribit's $98B Monthly Notional Turnover 8

The report specified,

“In April, 24% of all the notional volume traded on Deribit was on ETH instruments – a total of USD 23.8 billion, making it a new ETH record month on Deribit. As ETH continues to challenge the BTC dominance, the market expects crypto institutional demand to become more diversified, and the ETH options market to catch up with BTC.”

Moreover, the trading volume of Ethereum options that was registered on the four-largest derivative exchanges namely – Deribit, OKEx, Huobi, as well as bit.com, was found to be 50% more than that of Bitcoin in the starting of the week.

Figure for Ether options was found to be $1.32 billion as opposed to the trading volume of Bitcoin which steadied around $879 million.

Ethereum Flags Stake Above $3.2K Nudging Ahead Of Bank of America, PayPal

May 3, 2021 by Chayanika Deka

Ethereum [ETH] finally broke the psychological barrier of $3K in May this year. The crypto-asset rose to a new all-time high above $3,200 today after a challenging week as it broke away from the consolidation camp. With this, Ethereum has not just flipped Bank of America [BOA] but has also surpassed payment processing giant, Paypal in terms of market cap.

After posting nine consecutive green candles, the market cap of the second-largest cryptocurrency surged to $365 billion. In contrast, BOA and PayPal’s valuations were found to be at $307.99 billion respectively.

ETH — Ethereum Flags Stake Above $3.2K Nudging Ahead Of Bank of America, PayPal 10

ETH has established plenty of peaks this year. But the latest one was crucial since it came at the backdrop of a rather dull market movement. The trading volume has intensified over the past week that further pushed the coin to explore new heights.

The co-founder of the Ethereum blockchain, Vitalik Buterin has now officially become a crypto billionaire. If the 27-year old’s public Ether address has reached $1 billion on its balance after the token’s exponential growth on Monday.

Ethereum’s Price Explosion Has Found Substantial Backing

Ethereum’s on-chain fundamentals also turned bullish which further strengthened its upward momentum. The whales have continued to buy dips and the latest whale accumulation has backed the digital asset’s surge. In addition, the decline in the network’s gas fee has been somewhat of a relief for the ecosystem.

Moreover, the increasing active addresses, as well as transaction figures, have boosted Ethereum its rally to new highs.

Upon taking the derivatives realm into consideration, it was found that the open interest OI] across Ether options markets has significantly risen this year. The OI stood near $4 billion and the figure was up from a little $800 million at the beginning of 2020.

Also, the CME’s ETH futures market grew from an OI of $68m on the 1st of March well above to $370 million in just two months. The average open interest across Ether futures had soared to a fresh ATH of $8.6 billion recently.

Over $37.8 Billion Turnover Registered by Bitcoin, Ethereum Options

December 4, 2020 by Utkarsh Gupta

During the month of November, the derivatives platform of cryptocurrency heralded towards news heights in the industry. Firstly, CME’s Open-Interest reached an Open-Interest near $1 billion and it completely opened the institutional path in Bitcoin’s market.

With institutional interest reaching a commendable high, Deribit’s recent institutional newsletter suggested a new monthly notional turnover record of over $14.3 billion; a new daily BTC options record. Over 25,000 Bitcoin contracts were registered as the platform’s open-interest ranged over $4.5 billion.

Bitcoin Volume Highs and price nears New ATH

Bitcoin’s price has played an important role in the OI splurge on Deribit but Ethereum Options were able to draw significant attention as well. Over the month of November alone, Bitcoin’s value improved by 40% but Ethereum exhibited returns close to 56%. However, the sustainability of this rally was much higher in comparison to 2017.

In terms of number, Total turnover in USD was close to $37.8 billion in November, which was a whopping 123% above October 2020. The report added,

“750,123BTC options contracts were traded in November 2020, up 77% versus October 2020. 3,270,065ETH options contracts were traded in November 2020, up 95% versus October 2020.”

Increasing Volatility promoted interest, but dropping atm?

While November clocked in the best Option Contracts volume for BTC and ETH on Deribit, now both the set of digital assets were leading towards its largest expiry. Close to 31% of Bitcoin OI will expire before 2021, and for Ethereum the value was above 44%.

This particular sentiment may lead to the sudden decline of expected volatility. As reported, volatility nearly doubled in November(reaching 84% from 49%), the recent at the money volatility structure exhibited a drop.

Can the price drop with respect to dropping OI?

Temporarily yes. The Open-Interest execution would indicate that people will be cashing on their profits or losses over the course of December and short-term high liquidations may cause a little stir in the valuation.

However, the price of Bitcoin has been extremely stable during bouts of liquidation in 2020, as selling pressure has always been absorbed by rising buying pressure.

Hence, the price impact can be expected to be minimal, as Bitcoin and the collective market entertains another rally early next year.

Ethereum Options Market Stagnates; Here’s What It Means

October 1, 2020 by Reena Shaw

Ethereum has led an impressive rally for the altcoins this year, a contributing factor to the diminishing dominance of the world’s largest cryptocurrency, Bitcoin. However, this trend appeared to take a pause.

TWJ had earlier reported that a record-breaking 460,000 ETH options expired on the 25th of September which caused massive volatility in the underlying asset’s price movement as traders sought to hedge exposure on these positions, work out of them, or possibly take action in the spot market.

Sluggish Ethereum Options Trading Activity

The Ethereum options market stagnated after its monthly expiration last week. This caused a significant decline in the open interest further indicating an overall decrease in trading activity.

According to LongHash, if the number of investors betting for or against Ethereum increases, then the open interest is most likely to rise up. However, this was not observed lately since throughout the last month, the volume of Ethereum in the options market took a plunge, so did its open interest.

This signaled that the traders were not anticipating any dramatic price action and significant volatility in Ethereum in the near future.

An Advantage for Bitcoin?

According to the latest Skew chart, the spread between the six-month implied volatility [IV] for Ether and Bitcoin dropped more than 20% in the last four weeks. Correspondingly, the six-month realized volatility [RV] spread for the two coins bounced back up to levels last seen in August. This further indicated that the market participants do not expect significant dispersion between the two largest crypto-asset. In short, Ether could strongly mimic Bitcoin’s price movement in the near term.

Previously, the altcoin took market leadership from Bitcoin to lead significant rallies, a trend that was primarily catapulted the extensive activity in the DeFi sector. But the latest reversal is likely to hand over the leadership to Bitcoin. What does this mean?

Bitcoin has matured significantly over the past couple of years. What has further strengthened the crypto-asset was the ongoing pandemic which initially led to a serious fall in March, but recovered at a much faster pace than the global traditional market. One of the drivers was also the entry of many sophisticated players in the market.

And this trend could further help Bitcoin make a comeback and increase its dominance in the market.

What does this mean for Ethereum?

Well-known trader of Amsterdam Stock Exchange, Michael van de Poppe, explained that there could be two potential scenarios for the coin. ETH could breach the $375-level and trade close to the next resistance level at $415. However, if that does not materialize, the could drop below crucial support levels such as $350 which could further intensify the risk of falling to $280.

$ETH #ETHEREUM

All right, this one is moving upwards and that's good.

However, the crucial hurdle is around $366-375 to break.

If that breaks, $ETH is ready for $415.

If not, I assume $280 as a likely possibility for further corrective movements in Q4. pic.twitter.com/W0T005kbRt

— Michaël van de Poppe (@CryptoMichNL) September 28, 2020

Only time will tell if Ethereum will be able to break this impasse.

Ethereum 2.0 Launch, Over 460k ETH Options Expiring on Friday Could Drive Massive Volatility

September 23, 2020 by Reena Shaw

Despite the fact that the Ethereum platform has existed mostly in the shadow of Bitcoin, it has managed to spearhead several independent altcoin rallies. Throughout the year, Ethereum has shown sharp price movements with respect to Bitcoin and according to the latest development, volatility is coming back to Ethereum.

This was noted by the crypto research firm Coin Metrics in the latest edition of the State of the Network report which stated that the reason for this is primarily because of the surprise launch of Uniswap’s governance token ‘UNI’ on Ethereum mainnet and the heightened sell pressure that has overpowered the market.

However, since mid-2019. the volatility has been considerably low as compared to previous levels partly due to the foray of new market participants as well as the maturity of the crypto space. But there has been a turn of events as volatility seemed to have made a comeback one again. The report mentioned,

“This is significant because it follows a period of sustained levels of low volatility not seen since mid-2019. This increase in volatility precedes some significant events, namely the launch of the first phase of ETH 2.0 and, more urgently, the September 25th options expiration.”

As Ethereum 2.0’s much-anticipated move to Proof-of-Stake gets closer, the volatility of the crypto-asset is bound to have some effect. TWJ had previously reported that this has led to the increased development activity on Github which rose to a 7-months high.

Friday could be a big day for the ETH market

But this isn’t the only factor that has propelled a rise in volatility. On the derivatives front, Ethereum also has a record-breaking 460,000 ETH options expiring this Friday, on the 25th of September. A huge chunk of which, more specifically 90% of the expiring Ether options are held on derivatives platform Deribit.

UPCOMING BIG QUARTERLY EXPIRY! 💣

🔹 87k $BTC options are set to expire this Friday of which 67k (77%) is held at Deribit.

This number beats August’s record of 65k $BTC options!

🔹 459k $ETH options are set to expire this Friday of which 414k (90%) is held at Deribit pic.twitter.com/ALkVOSwY7u

— Deribit (@DeribitExchange) September 21, 2020

According to the report, this event is likely to add additional volatility to ETH’s price movement throughout the week, “as traders look to hedge exposure on these positions, work out of them, or possibly take action in the spot market in anticipation”.

Here’s Why Ethereum Could be Primed for Further Gains

September 2, 2020 by Reena Shaw

At a value of $462.18, Ethereum has climbed to levels not seen since July 2018. The incredible build-up was spun by the exploding popularity of decentralized finance [DeFI] as well as by the long-planned upgrade – Ethereum 2.0.

Ethereum’s rally has just begun and the following reasons indicate why the largest altcoin could see more gains in the coming days

Strong HODLing trend

Ether has enjoyed highs that that was last seen two years ago and the holders are anticipating a little more. This was evident from the latest Glassnode chart which showed that ETH held on exchanges has followed a consistent downtrend since mid-August. Conversely, the total supply held off exchanges has risen significantly. Meaning, holders were currently in an accumulation spree.

The upward price action has also resulted in the rise of mean transaction volume which climbed to a 5-month high of 0.236 ETH. Among other things, the number of active addresses has also increased substantially.

In addition, more than 93% of the current supply of ETH is now considered “in the money”. This was according to the charts of data analytic site, IntoTheBlock, which revealed that a significant chunk of addresses were in profit.

More Calls are being bought versus Puts

Gauging at the derivatives space, a sense of optimism was found to have taken over the traders. The decline in the put-call open interest ratio, which hit to a 3-month low, was indicative of this. According to the above Skew chart, the figures declined to 0.77 points which implied that the market is more bullish as investors were buying more calls in anticipation of a bull run ahead.

Bullish Futures Market

Another crucial indicator to understand the investor sentiment is by looking at futures markets premium to perpetual and swaps. The 3-month annualized premium appeared to be above 14%. Also, the 1-month futures contracts are trading above an annualized premium of 20%, indicating that buyers are betting that ETH’s spot price will surge in the near future.

Strong technicals

The technicals in ETH’s daily chart aligned with bullish momentum. Looking at the above chart, it can be noted that the daily moving averages acted as crucial support points for the ETH price candles from further decline. Interestingly, after undergoing a golden cross, the 50 DMA [Pink] has not only followed the price appreciation, but also the gauge with the 200 DMA [Purple] has risen, which was further indicative of an increasing positive price sentiment.

The RSI was well above the 50-median neutral zone but has so far not exhausted the buying pressure. This essentially depicted a bullish sentiment among the traders in the market.

Ethereum: ETH Was Valued at $1042 When it Last Reached 1.24 Million Daily Tx.Count

August 17, 2020 by Utkarsh Gupta

The spotlight continues to be on Ethereum, as August is turning out to be an extremely price lucrative month for the largest altcoin. Since 1st August, Ethereum was registered all-time highs of three occasions, going step by step from $400 to $425 to $443. Although after clocking in $443, the asset has faced corrections, the overall trend remains extremely bullish right now.

With respect to metrics as well, Ethereum’s fundamentals haven’t shied away from new heights. After registering a 20-month high hashrate in the charts, while transaction fees continued to run riots, Ethereum’s daily transaction count is now nearing an all-time high as well.

According to Santiment’s recent data, the daily transaction count of Ethereum’s network is quite close to its all-time high in the charts. Back during the rally of late December 2017, on January 4th, 201 when Ethereum mustered a valuation close to $1042 the daily transaction count reached a high of 1.34 million addresses, and earlier this week, the count was closing at 1.27 million.

Additionally, the current transaction fee levied on Ethereum also clocked in two all-time highs in a row, with fees of 17.8k on 8th August, and 20.3k on 13th August. All the above data typically suggest high user activity but the truth might be something else well.

DeFi is inflating the system, not user activity?

As reported earlier, Ethereum’s active addresses are falling down the levels day by day when other metrics such as hashrate, miner revenue, and ether fees are going up.

That is largely contradictory in terms of equating a fixed factor on why Ethereum’s network is so over-utilized.

With a doubt, DeFi’s role is huge. Many are suggesting that Ether’s price growth is due to the explosive expansion of DeFi, as the protocols are leading the charts in terms of token transactions, interacting with other dApps, and the Ethereum network itself.

Ethereum options; the only clean sign of user activity?

Now, even though there is substantial doubt about the authentic user activity in Ehtereum’s network, the Open-Interest on Deribit exchange suggests that Ethereum is still a pretty sort out asset from an investment perspective. In a short time, from May 2020 to August 2020, Deribit’s ETH OI was risen by $200 million, and despite the congestion in the network, Ethereum’s continues to maintain a favorable stance with the investors.

Over $4.3 Billion in Bitcoin, Ethereum Options Was Clocked in July 2020

August 5, 2020 by Utkarsh Gupta

The last 7 days in July was extremely positive for the price values of Bitcoin and Ethereum, as both virtual currencies improved by 23 and 45 per cent respectively. Ethereum has moved above $400 to its highest point in 2020 and the overall improvement in the ecosystem has had an impact on Deribit’s options market.

Deribit released its Institutional Newsletter recently and the derivatives exchange expressed that July was one of the best months in 2020 from an options volume.

According to the newsletter, the total options volume resulted during the previous month eclipsed everything in the past, as the total turnover clocked in at a whopping $4.3 billion. It was a massive 52 percent jumped from June 2020 for Deribit.

Official numbers indicated that 380,804 BTC options contracts were traded, rising by 44% versus June 2020 and for Ethereum options, the number clocked in was around 1,878,361 contracts; spiking by 41% since June 2020.

The report further added,

“The total Options OI on Deribit was up 37% vs. June, with an impressive 90% growth in ETH. However, BTC growth did not slow down either, increasing by 31% vs. Q2 expiry. Altogether a new Options OI record was reached with more than USD 2.01 billion worth of contracts open right before the expiry.”

In terms of total turnover from USD development, over $10.7 billion in July was witnessed jumping by 17% from June 2020.

The relative improvement of the derivatives market is a prime example of the improving interest in the crypto market. Traditional traders and accredited investors were getting drawn towards investment products involving Bitcoin and Ethereum, in order to gain substantial exposure.

However, Bakkt’s Bitcoin exchange did not have the same fruitful experience in July 2020.

Bakkt Bitcoin Contracts dropped from 221 to 58

According to a recent Arcane Research tweet, the number of Bakkt Bitcoin futures contracts that were held in July crashed about 75% in July, which was the lowest amount recorded throughout 2020.

The above chart illustrated that the number of Bakkt bitcoin delivery contracts declined from 221 in June to a lowly 58 in July. June was extremely positive for Bakkt hence this comes across as a major setback for the ICE backed exchange.

However, in spite of misfortunes the previous month, It is evident from Skew data that Bakkt’s Open-Interest is currently at an all-time high range of $25 million, which suggested that institutional investors were continuing to flood in the regulated exchange.