Deribit’s Ether Options Hit All-Time-High Amidst Rising Institutional Interest

Bitcoin and Ether exchange Deribit set a record earlier this week after ETH options on the platform surged to record highs. 

ETH Options Surge 

As per a tweet by on-chain analytics firm Skew, Deribit surpassed Bitmex, Binance, and newer competitors like ErisX for ether options. For the uninitiated, such instruments allow traders to capture, or hedge their positions, on future perceived gains or drops in the prices of the underlying asset. Options payout premiums until expiry, making them a risky, but somewhat passive, investment for speculators.

(Source: Skew)

Data shows $108 million of “open interest” on Deribit’s ETH options. The metrics mean investors may either be protecting against long-term investments in Ethereum or betting on price gains in the near future. 

The trading activity follows an increased market interest in Ethereum. In recent times, the world’s second-largest cryptocurrency by market cap has been increasingly deployed for private chains and the creation of DeFi products. The latter, in 2020, has attracted massive institutional interest in terms of both products and investments.  

Strong ETH Fundamentals

Strong fundamental advances for Ethereum naturally means the increase of speculators and traders. With the networks upcoming 2.0 “Serenity” upgrade to a PoS system, options data might mean surging prices in the near future. 

Deribit’s Ether options have quickly grown, steadily outpacing Bitmex. All contracts on the former are settled in USD, meaning no actual ETH is traded when positions are closed. This is unlike Bitmex, which settles all contracts in either BTC or ETH.

Prior to the rise, Ethereum options showed price spikes in September 2019, when Bitcoin rose about 20 percent over a few days. ETH went from $160 to over $200 levels, giving investors a gain of over 100 percent in January 2020. 

For highly-leveraged futures and options traders, the gains meant a lot more profits on their initial capital. This suggests how the two instruments are seeing a steady rise in popularity, compared to the usual “spot” trading.