Amidst the recent cryptocurrency rally, investors have flocked to cryptocurrency options, driving the trading volume to unprecedented levels. Bitcoin (BTC-USD) options trading volume has surged to a historic high in anticipation of the end-of-month, quarter, and year expiration date on Friday, according to data from The Block.
Monthly options trading volume for bitcoin has surpassed $38 billion across major crypto derivatives exchanges, with $26.7 billion in BTC options trading volume on Deribit. Furthermore, there has been a noticeable increase in derivatives trading on OKX and Binance, as reported by The Block on Thursday.
About $7.7 billion worth of options linked to bitcoin (BTC-USD) are set to expire on Deribit on Friday. The majority of outstanding contracts on the exchange are calls, providing the holder with the right (but not the obligation) to buy bitcoin at a predetermined price.
Deribit’s Chief Commercial Officer, Luuk Strijers, revealed that there is a combined open interest of over $11 billion in bitcoin and ether (ETH-USD) options leading up to Friday’s expiry. This marks the largest expiry to date for the exchange, with nearly $5 billion of these contracts expected to expire in the money.
“Beyond hedging, we also see clients rolling positions to 2024 expiries and expect to see more of that closer to the expiry as well as afterwards,” Strijers remarked.
The majority of bitcoin calls set to expire on Friday have a strike price of $45,000. However, at midday on Friday, the world’s largest token by market cap was trading at approximately $41,900, down from its 52-week high of $44,700 reached earlier in December.
The surge in bitcoin’s value since mid-October has been fueled by growing optimism regarding the anticipated approval of an exchange-traded fund (ETF) that directly invests in bitcoin by the Securities and Exchange Commission (SEC).
The SEC is expected to make a decision on ARK Invest’s spot bitcoin ETF by January 10 and on Grayscale’s proposal to convert the Grayscale Bitcoin Trust (OTC:GBTC) to an ETF by January 25.
Several other companies, including WisdomTree, Invesco, BlackRock, and Valkyrie, have also submitted filings for bitcoin ETFs.