For the first time, the open interest of Bitcoin Options at Deribit, a derivatives trading volumes and the leading BTC options trading platform, is near the $1 billion mark. The Deribit BTC options expires every Friday, May 22nd by 8 AM UTC.
The spike in open interest and related trading volumes not only reveals the confidence the community has on the Bitcoin network—its longevity, but the possibility of prices surging in the immediate term.
Deribit Options Expire Every Friday
Options is a derivatives product that is complex but can nonetheless provide higher rewards for traders. In exchange for immediate non-commitment, the trader has to pay a premium or a discount, state the strike price, and wait for expiry.
Depending on the options type, the settlement date tend to attract a lot of volatility since traders either have to exercise their options (if it is in the money) or leave them to expire (if it is out of the money). Deribit BTC options are “Vanilla” and cannot be exercised before expiry.
Therefore, as volumes spike, May 22 and May 29 could end up being days of heightened volatility as a sizeable chunk of the $1 billion of traded volumes will either expire or exercised.
Deribit bitcoin options open interest touching $1bln for first time pic.twitter.com/32lEyJTrFZadvertisement
— skew (@skewdotcom) May 20, 2020
Bitcoin Traders Are Confident
Away from the adoption talk and other on-chain metrics which spur discourse from time-to-time, price and price forecasts form an enormous part of Bitcoin. Its ecology, as it taps on the ever-increasing community, therefore comprise price punters and holders who clash from time to time.
Specifically, after halving, there have been an array of predictions pinned on the state of the network—its hash rate, and activity from now on. This is despite the fact that miners are now tasked to assign more resources to the network for them to stand a chance of being profitable.
There are some who are confident on BTC future prices and with models as stock-to-flow predicting higher prices—upwards of $50,000 in the next few years, it is not wild that nine percent of Bitcoin Options traded are convinced that BTC will soar past 2017 highs of $20,000 by the end of the year.
While their prognosis may be right, it is the incessant chatter around price and confidence from holders that Bitcoin’s future is bright and stable. Sparking this discussion has been encouraging on-chain metrics, which also draws more traders angling to benefit from crypto price volatility.