Deribit, a leading cryptocurrency derivatives exchange, is poised to witness historically high levels of Bitcoin options open interest expiring this Friday. The surge in open interest, totaling $9.5 billion, reflects increased liquidity and market participation.
According to analysts at Deribit, this month-end expiration is one of the largest in the exchange’s history and accounts for about 40% of total open interest. In comparison, the month-end maturities in January and February were significantly lower, at about $3.74 billion and $3.72 billion, respectively.
A notable aspect of this expiration is that a significant portion of the options, valued at $3.9 billion, expire in the money, based on the current spot price of approximately $70,000. This means that a significant number of options contracts hold value at current market prices, potentially leading to increased buying activity as traders look to hedge or take advantage of further price movements.
Deribit analysts expect Bitcoin price to see increased volatility or upward pressure as option holders exercise profitable contracts. This situation has occurred due to the recent rise in the price of Bitcoin, which has resulted in higher levels of in-the-money expirations compared to the typical scenario.
Luuk Strijers, Chief Commercial Officer at Deribit, highlighted the bullish sentiment prevalent in the cryptocurrency market, especially evident in derivatives data. Strijers highlighted the basis return that can be achieved by buying spot and selling long-dated futures, which indicates strong demand in the market.
Strijers also noted a significant increase in Bitcoin notional open interest for contracts worth more than $100,000 on Deribit. He also pointed to changes in put-call ratios for Ether options, indicating evolving market sentiment for short and long expirations.
Overall, Deribit’s rising Bitcoin options open interest levels reflect the increasing maturity and sophistication of the cryptocurrency derivatives market, driven by bullish market sentiment and evolving trader strategies.
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