In recent days, institutional investors traded a new USD 49 million cap on ETH options on the exchange Deribit. The price of the cryptocurrency has had an advance of 21.8% in the last seven days.

The rebound in the price of the cryptocurrency Ether (ETH) is positively influencing the derivatives market. The trading volume for the options and the open interest in the Ethereum cryptocurrency hit new all-time highs in recent days.

According to the analytics firm Skew; institutional investors have recently been more active in the Deribit and OKEx markets. On the first exchange, there was a cap on trading volume of USD 49 million for ETH options. On the second exchange platform, the amount rose to USD 7.4 million.

Concerning open interest, Skew shows that it also reached new caps. On the Panamanian exchange Deribit, the figure jumped to USD 225 million in July. In the case of OKEx, the amount reached USD 16 million.

The rise in the price of Ether, as well as that in the derivatives markets, could have its origin in the announcements about the launch of the new version of the network, Ethereum 2.0. Another element to consider is the greater use that DeFi applications have experienced in the smart contracts blockchain.

Options, like that of Ether, are derivative financial instruments for the purchase or sale of securities at a specified price with a set expiry date in the future. In the case of open interest, this is the volume or the total number of open positions in futures contracts not closed on a specific day.

Ether Derivatives on the Rise

The Ether derivatives market has aroused interest in recent months. Open interest in Ether derivatives experienced an unusual rebound last May. At the time, open interest involved 535,000 Ether units, which translated into a cap of USD 128 million.

Last February, analysts already predicted that the financial options market could be riskier for Ether than for Bitcoin in the coming months due to volatility. For traders, volatility can have a positive impact on the price of financial options.

If there is greater volatility, there could be greater demand for the protection of call options (as an upward bet) and put options (as a downward bet).

What happens with ETH options and open interest contrasts with what happens with Bitcoin options in the Bakkt market. After an announcement with great fanfare in 2019, the trading volume is nil, that is, zero US dollars.

Open interest in Bitcoin options does not arouse enthusiasm in this market. This contrasts with the figures that Deribit recorded with BTC, which reached a top of USD 1,300 million in July.

Ether derivatives have recorded new caps among institutional investors. However, the amounts that they trade are relatively small, compared to the figures that the exchanges handle. For example, only the ETH/USDT pair trades USD 253 million in 24 hours on Binance, while the figure for the ETH/USD pair is USD 57 million on Coinbase Pro.

At the time of this writing this article, the price of Ether was USD 307 per unit with 8.38% growth in the last 24 hours, according to data from CoinMarketCap. In the last seven days, the advance is about 21.8%, according to the same source.

By Alexander Salazar


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