Deribit to Launch Altcoin Options for Solana, Ripple, and Polygon
Deribit, the largest cryptocurrency options exchange, has announced its plans to offer altcoin options for Solana (SOL), Ripple (XRP), and Polygon (MATIC). Despite the current slump in crypto prices, the exchange believes that these derivatives will provide investors with a better hedge compared to Bitcoin (BTC) and Ethereum (ETH), which are experiencing record-low volatility.
Delay in Launch Due to Low Volatility
The launch of these altcoin options contracts has been delayed as Deribit carefully considered the optimal timing. According to Luuk Strijers, Deribit’s Chief Commercial Officer, the lack of volatility did not deter their plans. In fact, they anticipate that the introduction of these contracts will increase volatility in the market once they go live in January.
ETH Derivatives Show Poor Volumes
Ethereum (ETH) has fallen out of favor among investors due to its low volatility. On the other hand, altcoins like SOL, XRP, and MATIC have lower liquidity, making it easier for smaller trades to impact their prices. Market manipulation is also more prevalent in altcoins than in Bitcoin. However, Deribit has not officially confirmed whether it will implement surveillance measures to mitigate manipulation risks for its options contracts.
Expansion Plans and Regulatory Developments
Deribit is currently in the process of moving from Panama to Dubai before launching its altcoin options contracts. This move follows significant losses incurred by the exchange when Three Arrows Capital failed to meet margin requirements.
The expansion into altcoin options comes at a time when US regulators have delayed approving a spot Bitcoin ETF. Additionally, institutional investors have shown little interest in ETH futures ETFs. The trading volume of ETH futures is only 0.2% of the volume experienced by Bitcoin futures ETFs in 2021.
The UK Financial Conduct Authority has advised its residents to avoid Huobi and KuCoin due to new advertising restrictions. The FCA now has the authority to regulate crypto, and an online safety bill allows it to crack down on unauthorized crypto promotion. Detailed rules for regulating crypto in the UK are expected in Q1, while Europe’s Markets in Crypto-Assets bill will come into effect in 2024.
Hot Take: Deribit Expands Altcoin Options Despite Low Volatility
Despite the current low volatility in the cryptocurrency market, Deribit remains committed to its plans of launching altcoin options for Solana, Ripple, and Polygon. The exchange believes that these derivatives will provide investors with a better hedge compared to Bitcoin and Ethereum. While ETH has fallen out of favor due to its low volatility, altcoins like SOL, XRP, and MATIC offer opportunities for smaller trades to impact prices. However, market manipulation is more prevalent in altcoins. Deribit’s expansion comes at a time when regulatory developments, such as the delay in approving a spot Bitcoin ETF and low institutional interest in ETH futures ETFs, are shaping the industry.
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