The crypto options market developed rapidly in the second quarter of 2020. According to the latest cryptocurrency derivative industry report TokenInsight, volume increased 166% year-on-year compared to the second quarter of 2019.

The derivative products that define these sizes are futures and options. As futures grow with bullish sentiment betting, both open interest and option volume have reached all-time highs.

Highest level ever
On Wednesday, open interest in Ether (ETH) options reached an all-time high of $ 351 million in Deribit and $ 37 million at OKEx. In fact, open interest in ether options is 2.5 times higher than it was in early July.

One day before the big Bitcoin (BTC) options expiration date of July 3, interest in Bitcoin options reached an all-time high of $ 1.7 million in Deribit and $ 268 million in CME, while the daily volume in Deribit Doubled the whole time. high. More than 47,500 contracts were traded on July 28.

That rally at all, the day before it expires on the last Friday of the month, can often lead to increased adoption of options and structured products, especially given OI’s own track record at CME, the world’s largest futures exchange.

Total BTC / ETH options

Luuk Strijers, chief trade officer at Deribit, said the OI is the best indicator to gauge the market, telling Cointelegraph, “Open interest is the best indicator to gauge market dependence at late July highs.” He added: “The open interest for BTC options is currently 116,000 contracts at face value. 1.5 billion dollars. ”

New prospects for investors
Options are financial instruments that investors can use to buy or sell an underlying asset, depending on the type of contract they own. Call options give owners the right to buy an asset at a strike price during a specific period of time, while put options give owners the right to sell an asset under similar conditions. Denis Vinokurov, head of research at BeQuant – the cryptocurrency exchange provider and institutional brokers – told Cointelegraph:

“Options are a very effective way to secure exposure to the underlying product, be it Bitcoin, Ethereum Spot, or even futures / perpetual contracts. In addition, it is easier to structure products that provide a ‘return’ and this has attracted the attention of market participants especially in the wake of market price movement Side. ”

Lennix Lai, Director of Financial Markets at the OKEx Crypto Exchange, told Cointelegraph that traders should be careful because “high OI indicators alone do not mean that the market is bullish or bearish,” adding that investors are vulnerable to long strategies:

“We have realized that there are many professionals who use options to hedge their long BTC portfolio only. There are many structured products on the market that are specifically designed for professionals to increase returns or obtain odd payouts.”

With the Bitcoin price briefly rising to the $ 11,900 mark several times earlier this month, public interest in cryptocurrencies increased. Bitcoin is up 27% since July 1. This is the highest increase in 2020. Bitcoin options are currently traded mainly on Deribit, CME, OKEx, and LedgerX, while Bakkt, a crypto exchange on the large traditional Intercontinental exchange, doesn’t see any volume options despite the product listing.

BTC Sell / Call ratios

In addition, the purchase rate increased from 0.52 m / m to 0.76 on August 6, which means that a greater proportion of the call options were sold compared to the call options. This is a strong indication of the upside that investors are currently carrying. Lay added to this thought:

“Given the increasing demand for Bitcoin and OI options and volume, this appears to indicate that investors continue to view the Bitcoin price positively, with the larger macro factors such as the price of the US dollar and gold falling to all-time highs.” Bitcoin is growing in demand overall. ”

Demand is increasing for Ethereum 2.0 and DeFi
More and more investors appear to be buying an investment in ETH with options in 2020. Ether, second only to Bitcoin in the cryptocurrency space, has become one of the leading experimental labs in the field of blockchain scalability, supported by the institutional development communities and large corporations. Therefore, ETH is naturally becoming a speculative asset with the development of DApps.

Source: CoinTelegraph