Bitcoin options trading volume hits all-time high as year comes to close

Quick Take

  • Bitcoin options trading volume has hit an all-time high across major crypto derivatives exchanges.
  • On Friday’s options expiry, a record-breaking $7.7 billion worth of bitcoin-linked options will expire on Deribit.

Bitcoin options trading volume has reached an all-time high ahead of Friday's end of month, quarter and year expiry date, according to The Block's Data Dashboard.

Monthly options trading volume for the largest digital asset by market capitalization has reached an all-time high of over $38 billion across major cryptocurrency derivatives exchanges. That includes $26.7 billion in BTC options trading volume on Deribit and an uptick in derivatives trading on OKX and Binance.

On Friday's options expiry, around $7.7 billion worth of options tied to bitcoin will expire on Deribit, marking a significant milestone for the derivatives exchange. The majority of contracts still outstanding on Deribit are calls, which provide the right, but not the obligation, to buy bitcoin at a set price. It's assumed that a trader who buys call options is implicitly bullish on the market, while a put buyer is bearish.

According to Deribit Chief Commercial Officer Luuk Strijers, there is a total of over $11 billion in combined bitcoin and ether options open interest ahead of Friday's expiry. "This marks Deribit's largest expiry thus far of which almost $5 billion will expire in the money," Strijers told The Block.

Open interest by expiration on the Deribit derivatives exchange.

'Largest amount ever'

"This is the largest amount ever as well, potentially resulting in above average hedging and trading activity. Beyond hedging we also see clients rolling positions to 2024 expiries and expect to see more of that closer to the expiry as well as afterwards. After the expiry all eyes and trading activity will be focused on the upcoming ETF decision," Strijers added.

The majority of calls expiring on Friday are for a strike price of $45,000, indicating that experienced traders had anticipated the digital asset's price would surpass that level by the end of the month. However, bitcoin has pulled back lower and was changing hands for $42,900 at 7:45 a.m. ET, according to The Block's Price Page.

CME bitcoin options trading volume hits all-time high

Monthly trading volume of Chicago Mercantile Exchange bitcoin options has also hit an all-time high, suggesting increased participation from sophisticated market players. According to The Block's Data Dashboard, CME bitcoin options trading volume reached $2.39 billion, with four days left in the month of December. Open interest on CME bitcoin options has also reached an all-time high of over $2 billion, ahead of Friday's expiry date.

Despite broad optimism, one metric suggests that bullish bets by derivatives traders are becoming harder to maintain.  According to CryptoQuant's weekly report, sell volume is now growing more than buy volume in bitcoin futures markets.

"The derivative markets are showing the highest level of funding rates in more than a year for bitcoin, meaning that traders are paying too much to open long positions," CryptoQuant analysts said.


Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.

© 2024 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

Brian McGleenon is a UK-based markets reporter for The Block. He has worked as a financial journalist and producer for multiple news outlets over the years, such as Fuji Television, The Independent, Yahoo Finance, The Evening Standard, and The Daily Express. Brian is also a screenwriter and producer with one feature film produced and one in development with Northern Ireland Screen. Apart from web3 and cryptocurrency developments, he is also interested in geopolitics, environmental issues, artificial intelligence, and longevity research. Get in touch via email [email protected].

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