Jeff Fawkes is a seasoned investment professional and a crypto analyst. He has a dual degree in Business Administration and Creative Writing and is passionate when it comes to how technology impacts our society.
Bitcoin options market is rising, per the crypto analytics firm Skew, with a massive money inflow from institutional investors. Yesterday, the volume of crypto derivatives trading was only increasing, reaching the level of almost $200 million.
Bitcoin options are receiving a major call from the investors. They started selling and buying derivatives as the market went down. Let’s see what has happened here in detail.
The CME Group, Deribit, Bakkt, LedgerX, and OKEx are experiencing the money inflow wave now, per the Skew research. Previously, the traders went onto such a big activity on February 11, with $171 million in options going through the fully compliant market.
Worth noting that the Bakkt option experience a lack of popularity. During the last two weeks, they had no deals, and the last trade is dated February 27. Per the Skew research, cryptocurrency exchange Deribit is leading in the number of processed volume – they even had $170 million in contracts executed in a single day. Su Zhu from the Three Arrows Capital gives a quick brief:
“There’s been an explosion of interest from investors, intraday traders, and miners in BTC options on Deribit the past few months”
Emmanuel Goh, CEO Skew told CoinDesk news portal that derivatives trading always gains in volume when the world is in a panic due to possible economic collapse (this time, caused by coronavirus):
“Derivatives trading activity tends to increase when a large spot move occurs, which was triggered yesterday by an extraordinary sell-off in risk assets globally”
Indeed, during the last weeks, the market is stalled, as China is not supplying the necessary resources. Those include car parts, space industry stuff and a ton of consumer goods.
Bitcoin Halving Sparks Minds, Price May Go Up to $17,800
Bitcoin’s volatility, at the same time, is showing a massive opportunity with playing around the 8,000 level. Sure, some notable crypto experts claim Bitcoin could hit 100,000 shortly. But the real trading keeps flowing around the mentioned level. Traders on classic crypto market show signs of total uncertainty. Some analysts claim that the $8,000 level is critical for miners, which is a big risk. The network support may become unprofitable for them if BTC goes well under $7,500.
Per the calculations of Charles Edwards from Capriole Digital, Bitcoin’s price must rush up to $17,800 after the halving, or the average miner’s effort becomes a financial disaster. Stock to Flow model claims that Bitcoin is cool even when reaching the $7,600 levels. Because lots of miners don’t care about the current price and they just keep mining to sell off in the future.
The more classic markets show a massive of the red candles, the more investors putting their money into crypto derivatives. While Bitcoin’s price experience a drop, the futures trading flourish. The physically delivered or exercised contract volume spikes from $798 million on Sunday to $841 million on Monday.
During the first 1,5 months since the beginning of 2020, open positions were raising from around $250 million to $950 million. This may be one of the precursors of the institutional investors’ grand return to the crypto industry after the ‘ice age; in January 2019, when some oracles claimed futures trading is almost dead. With exceptions like Deribit and CME platforms, they always have orders from clients, even in the bad days. CME Group provides data showing that they had executed more than 6,500 Bitcoin futures contracts daily during 2019.
The oil war between the U.S., Saudi Arabia, and Russia will keep influencing the markets. Maybe the derivatives trading will show solid growth in the next weeks.