Data indicates the Options denominated in Bitcoin Open Interest has seen a notable increase recently, hitting a new record high. The latest report highlights that the recent market volatility has ignited fresh activity in the options market. Options serve as a tactic used by derivatives traders to predict the upcoming fluctuations in Bitcoin’s value. An options contract grants the investor the right, but not the obligation, to buy or sell the cryptocurrency at a set price on or before a designated date. Bullish options bets are referred to as calls, whereas bearish ones are known as puts.
Historically, futures trading has been fundamental to the BTC derivatives market. However, recent trends indicate a surge in the popularity of options, which are now competing with futures in terms of Open Interest. The Open Interest in this context represents a measure that indicates the total count of positions linked to a particular market that are still active across all centralized exchanges. The chart illustrates the trend in value for the options market over the past year. The graph clearly indicates a recent increase in Bitcoin Options Open Interest, implying that options traders are actively establishing new positions.
This rise in activity aligns with notable variations in the spot price of BTC. The increase in the indicator has been so strong that it has driven its value to a new record high. Report pointed out that this arises from “a combination of volatility-arbitrage strategies and renewed demand for risk management.” Even with a significant increase in the Options Open Interest measured in BTC, the USD equivalent has not experienced a similar rise, staying considerably below the high seen in late October. Nonetheless, the rise in the BTC-denominated metric suggests that investors are modifying their positions, even though the overall USD capital is reduced. “This prepares us for the upcoming key expiry, which is turning out to be one of the most important in the near future,” explained the analytics firm.
In line with the trend seen in USD-denominated Options Open Interest, the perpetual futures market indicator has similarly faced a recent downturn. The chart above shows that Bitcoin Futures Open Interest has seen a steady decrease after the major deleveraging event in October. The rapid decline indicates that investors are pulling back from risk instead of facing intense sell-offs.