Open Interest Surges to New Highs, Ether Options Market Records Highest Volumes Since May
On Wednesday, both Bitcoin and Ether rose to their new all-time highs of $69,000 and $4,870, respectively.
However, this bout of volatility led to the liquidation of 172,576 traders in the last 24 hours for more than $700 million, with Binance accounting for 47.4% of it though the leading crypto exchange doesn’t provide complete numbers.
1) Institutionally fueled rally +US inflationary spike breached 69k/4.8k ATHs, but optimism blinded normal Hedges, TP +Option flow rotation.
Then Evergrande news shook global risk assets and as BTC<68k, aggressive buyer Nov26 64-66k Puts added to earlier Nov12/19 61+63k strikes. pic.twitter.com/BJPC6Iy679
— Deribit Insights (@DeribitInsights) November 10, 2021
During new highs, the open interest on Ether futures had surged to a new high as well at $14.66 bln, which today has gone down to $13.15 bln.
However, this loss of OI wasn’t reflected much on CME, where it is still at $1.26 bln, from $1.3 bln on Tuesday. In terms of OI notional value, CME sits at 6th place with Binance at first place with $2.95 billion, followed by FTX, Bybit, Bitfinex, and OKEx.
Meanwhile, CME sits at 2nd place in the Bitcoin futures market with $4.62 bln OI, down from $5.45 bln ATH in late October. With almost $6 bln in OI, Binance is yet again the leader, which reached a new high on Wednesday at nearly $7 bln.
Total OI on Bitcoin futures is currently around $25.8 bln, seeing a small setback from yesterday’s peak of $29.47 bln. BTC -2.10% Bitcoin / USD BTCUSD $ 50,636.44
-$1,063.37-2.10% Volume 30.2 b Change -$1,063.37 Open $50,636.44 Circulating 18.9 m Market Cap 956.79 b 1 h BTC Hash Rate Nearing ATH, Iceland Rejecting New Bitcoin Miners Due to Power Shortage 2 h Bitcoin Acting Like A Risk Asset, Struggling with Rising Macro Uncertainty 1 d Solana Unaffected by Price Jitters while Bitcoin, Ether, Polkadot, and Cardano Post Outflows
The Ethereum option market, meanwhile, is seeing the highest volumes since May. Open trade volume on the dominant options exchange Deribit surged, coinciding with Ethereum setting new highs.
— Deribit (@DeribitExchange) November 10, 2021
“Option volumes generally increase when markets turn volatile, and traders take directional bets as buyers of options have a potential to earn high gains while keeping their losses limited (due to a non-linear option payoff),” noted Kaiko in its recent report.
However, despite low levels of volatility, options volumes for Ether hit their highest level since May, meaning traders are confident in the current market and are seeking less protection. Call options are bought to bet on price increases, and protection is acquired throughputs if traders foresee price declines.
OI on Ether options is currently at $7.25 bln, with Deribit accounting for more than 97% of it, up from a $7.4 bln high made in mid-May.
7/ In ETH, the ‘Raoul effect’ perpetuates with large open interest in ETH calls (Chart) and elevated implied vol levels in the March tenor. pic.twitter.com/rNLzQc56Ai
— QCP Capital (@QCPCapital) November 11, 2021
Ethereum has actually been making new highs for several days now and is up 548% this year so far compared to Bitcoin’s 123% YTD gains.
Interestingly, despite the new highs, both bitcoin and Ethereum’s daily trade volume has remained relatively flat since the summer. While Bitcoin’s trade volume has been half of its average from January to May, Ethereum did some better by returning to just below January levels though it sharply lags May volumes.
However, May’s record high volume was a result of ATHs being followed by a massive price crash. Also, the volume and sentiments have surely started to return in the market and are gradually making their way to record highs.
The ongoing uptrends may not be enough to draw in the number of new investors yet, either, as we saw earlier this year.
Meanwhile, Ethereum continues to lose market share to other layer 1s. Since January, Ethereum’s market share relative to top Layer 1 tokens has fallen from 76% to 42% of total volume.
Among the “Ethereum Killers,” Solana has grabbed the lion’s share of volume as it is increasingly used for DeFi and NFT transactions. SOL -2.83% Solana / USD SOLUSD $ 191.91
-$5.43-2.83% Volume 2.41 b Change -$5.43 Open $191.91 Circulating 307.35 m Market Cap 58.98 b 2 h Bitcoin Acting Like A Risk Asset, Struggling with Rising Macro Uncertainty 20 h Over 4.4 Billion Added in Total Stablecoin Supply in the First Week of December 1 d Solana Unaffected by Price Jitters while Bitcoin, Ether, Polkadot, and Cardano Post Outflows