The recovery of the broader crypto market this year has led to a surge in the digital asset derivatives market as institutional investors seek exposure to the crypto space.
According to a recent Bloomberg crypto-options-trading-volume-hits-record-as-etf-deadline-nears” target=”_blank”>reportThe deadline for US regulators to approve or reject bitcoin (btc) exchange-traded funds (ETFs) has led traditional investors to turn to cryptocurrency options and futures, resulting in record-breaking trading volumes. .
crypto Options Trading Hits Record Level
Before options expire on Friday morning, crypto options trading volume hit a new all-time high, with options worth $11 billion in face value, as highlighted by Bloomberg. Of this total, bitcoin contracts accounted for $7.7 billion, while ethereum (eth) options accounted for $3.5 billion.
Despite the expiration of many options, the impact on major cryptocurrencies has been limited. With its strong support floor at $42,000, bitcoin has maintained its position for a possible uptrend once bullish momentum returns and buying pressure increases.
Over the last 24 hours, bitcoin has traded within the same range as the previous day, at $42,200, experiencing only a 0.4% drop. However, bitcoin has yet to fully recover from its 3.4% drop over the past seven days.
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On the contrary, eth was affected by the expiration of options contracts. ethereum, the second largest cryptocurrency on the market, fell more than 2%. EHT fell to $2,316 after hitting a yearly high of $2,445 on Thursday.
However, while increased trading activity may accompany options expiry, it is unlikely to affect spot market prices, according to Luuk Strijers, chief trading officer at Deribit.
Strijers notes that clients are expanding their positions until expiration in 2024 and additional activity is anticipated after expiration. The focus of attention and trading activity will mainly be on the imminent ETF decision, Bloomberg notes.
Rise of traditional asset managers
The cryptocurrency market has seen a strong rebound this year, with bitcoin rising almost 160% following a turbulent 2022 marked by industry scandals and price drops.
The rally has been driven in part by optimism around the potential approval of spot bitcoin ETFs, which would attract a broader range of investors to the asset class.
Ryan Kim, head of derivatives at leading digital asset brokerage FalconX, highlights the growing share of cross-macro accounts, referring to large traditional asset managers allocating a small percentage of their portfolios to cryptocurrencies and crypto-focused hedge funds. .
Additionally, according to Bloomberg, perpetual futures, a favorite tool for leveraging cryptocurrency trading, are trading at a significant premium compared to spot prices, indicating growing demand for such products.
Overall, the rise in the cryptocurrency derivatives market, driven by options expiry and the pending decision on bitcoin ETFs, reflects the growing interest of institutional investors in the crypto space.
Record trading volumes and increased participation by traditional asset managers highlight the evolving landscape of digital assets.
As the market awaits the regulatory verdict on bitcoin ETFs, it remains to be seen how these developments will shape the future trajectory of the crypto market and its integration with traditional financial systems.
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Featured image from Shutterstock, chart from TradingView.com
