Are you a crypto-curious person? Take a look at the options
Are bitcoin and ether finally making a comeback? If crypto options traders are to be believed, bitcoin and ether have finally turned a corner. Deribit saw a 82 percent increase in the volume of bitcoin options traded.
According to crypto market maker OrBit Markets, the volume of bitcoin options traded on Deribit (one of the most popular exchanges for crypto-focused derivatives product products) increased by 82% in January compared to December. The number of Ether options increased by 38 percentInvestors are positioning themselves for price gains. The volume is skewed towards bullish call options. This means that investors pay a premium to have the option to buy bitcoin or other cryptocurrencies at a future date and agreed prices - rather than the opposite, bearish options to sell." You've seen people trading in $50,000 calls for example. That's been the general appetite we've seen – just increased appetite for upside," said Chinedu Umee-Ezeoke (quantitative research analyst at data firm Laevitas).After months of calm trading and low volatility, the surge in options markets coincides with a 40% jump in bitcoin's price in January - its highest month since October 2021 – and a 32% jump in ether.
The total bitcoin futures open interest, which measures the number and settlements of all contracts, was 293,000 on Jan 27. According to Laevitas data the put-to call ratio was 0.42. This indicates that traders preferred calls to puts." People are interested both in the upside potential for bitcoin and ether but also worry about a potential pullback following the massive run-up of prices," stated CK Zheng founder of ZX Squared, a crypto derivatives-focused hedge funds.
Markets are betting that the Fed will raise interest rates more than initially anticipated, which could dampen demand for riskier assets like cryptocurrencies, after U.S. employment data came in better-than expected last week.