Bitcoin Options Market Surpasses Futures
The options market on Bitcoin has now surpassed futures by Open Interest (OI). According to CoinGlass data, the total OI in the BTC options market has reached $17.5 billion compared to a total OI of about $16.2 billion across all BTC price futures markets.
Boom in Bitcoin Options
The CoinGlass chart shows that at the beginning of the year, the total Open Interest in options on Bitcoin fell below $3.5 billion but rose to $14.5 billion in October 2021. It collapsed below $7 billion in January 2022, then fell below $5 billion by July. By the end of January 2023, it climbed back up to $7 billion and surpassed $14.5 billion again in March, reaching new highs similar to those of 2021.
From March onward, the OI on BTC options remained above $10 billion after some major U.S. banks failed last year’s bear-market, indicating increased sophistication of the market.
A More Sophisticated Market
The market is becoming more sophisticated with large institutional investors getting involved. The entry of traditional giant BlackRock with its application to issue one of the first spot Bitcoin ETFs in US history shows that the market is maturing and resembling that of equities.
According to Luuk Strijers, Deribit’s commercial director, increased activity in the options market is a clear sign of this market’s sophistication.
Options Market
Options are used not only for betting on price changes but also for risk mitigation as they give buyers the right, but not obligation, to buy or sell an asset at a predetermined price and date. They can be used when there are problems and perhaps not used when everything goes as planned or to amplify returns. They are generally used by professional or very experienced investors and speculators due to their non-obligatory nature.
Hot Take
Bitcoin’s options market has surpassed futures by open interest and is becoming more sophisticated with large institutional investors getting involved. The boom in Bitcoin options indicates an increased maturity and attractiveness of this market over spot markets for medium- to long-term investors. The growth in options markets may indicate a growing preference for strategic positioning, hedging, or accessing implied volatility increases.
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