Over the past two months the open interest on Bitcoin options has held reasonably steady even as the figure increased by 118% to reach $8.4 billion as (BTC) price rose to a new all-time high. The result of Bitcoin’s price appreciation and the rising open interest on BTC options has resulted in a historic $3.8 billion expiry set for Jan. 29.
To understand the potential impact of such a large expiry, investors should compare it to the volumes seen at spot exchanges. Although some data aggregators display over $50 billion to $100 billion in daily Bitcoin volume, a 2019 report authored by Bitwise Asset Management found that many exchanges employ a variety of questionable techniques to inflate trading volumes.
This is why when analyzing exchange volume, it’s better to source the figure from trusted data aggregators instead of relying on the data provided by the biggest exchanges. As the above data indicates, BTC’s spot volume at exchanges averaged $12 billion over the past 30 days, a 215% increase from the previous month. This means the upcoming $3.8 billion expiry translates to 35% of spot BTC daily average volume.
Exchanges offer monthly expiries, although some also hold weekly options for short-term contracts. Dec. 25, 2020 had the largest expiry on record as $2.4 billion worth of option contracts expired. This figure represented 31% of all open interest and shows how options are usually spread out throughout the year.
Data from Genesis Volatility shows that Deribit’s expiry calendar for Jan. 29 holds 94,060 BTC. That unusual concentration translates to 45% of its contracts set to expire in twelve days. A similar effect holds at the remaining exchanges, although Deribit has an 85% market share overall.
It is worth noting that not every option will trade at expiry as some of those strikes now sound unreasonable, especially considering there are less than two weeks left. The bullish $46,000 call options and above are now deemed worthless and the same has happened to the bearish put options below $28,000, as 68% of them are now effectively worthless. This means that only 39% of the $3.8 billion set to expire on Jan. 29 are worth exploring.
Analyzing open interest provides data from trades that have alreadyd passed, whereas the skew indicator monitors options in real time. This gauge is even more relevant as BTC was trading below $25,000 just thirty days ago. Therefore, the open interest near that level does not indicate bearishness.
When analyzing options, the 30% to 20% delta skew is the single most relevant gauge. This indicator compares call (buy) and put (sell) options side-by-side. A 10% delta skew indicates that call options are trading at a premium to the more bearish/neutral put options. On the other hand, a negative skew translates to a higher cost of downside protection and is a signal that traders are bearish. While a $3.8 billion options expiry is spine tingling, nearly 60% of the options are already deemed worthless. As for the remaining open interest, bulls are mainly in control because the recent price hike to a new all-time high obliterated most of the bearish options. With the expiry moving closer, a growing number of put options will lose their value if BTC remains above the $30,000 to $32,000 range.
|#||Crypto||Prediction||Accuracy||CVIX||Price||24h||7d||Market Cap||7d price change|
|1||BTC||Bitcoin predictions||78.4%||35||$22 994.25||-3.54%||0.01%||$439 591 538 662|
|2||ETH||Ethereum predictions||68.8%||68||$1 687.91||-5.10%||3.56%||$205 761 571 724|
|3||USDT||Tether predictions||95.6%||1||$1.000205||0%||0%||$66 531 586 544|
|4||USDC||USD Coin predictions||96%||1||$1.000033||0.02%||-0.01%||$54 021 851 086|
|5||BNB||Binance Coin predictions||71.2%||62||$322.84||-0.68%||11.75%||$52 086 335 344|
|6||BUSD||Binance USD predictions||95.2%||1||$1.000068||0%||0.01%||$17 752 502 175|
|7||XRP||XRP predictions||77.6%||36||$0.363424||-3.65%||-1.50%||$17 569 045 535|
|8||ADA||Cardano predictions||72%||50||$0.511389||-4.25%||1.61%||$17 253 774 183|
|9||SOL||Solana predictions||78%||44||$39.74||-6.33%||3.54%||$13 844 600 613|
|10||STETH||Lido stETH predictions||94.8%||1||$2 941.39||-0.40%||-3.32%||$10 258 752 564|
|11||DOT||Polkadot predictions||68.8%||62||$8.71||-4.69%||9.10%||$9 626 327 113|
|12||HEX||HEX predictions||64.8%||70||$0.054592||-1.19%||18.95%||$9 466 937 752|
|13||DOGE||Dogecoin predictions||81.6%||28||$0.068228||-6.49%||1.79%||$9 051 914 563|
|14||AVAX||Avalanche predictions||70.4%||55||$27.42||-3.30%||17.24%||$7 814 089 843|
|15||DAI||Dai predictions||93.6%||1||$0.999863||0.05%||0.03%||$7 525 054 582|
Get cryptocurrency price predictions, forecasts with analysis and news right to your inbox.
© 2015-2022 Crypto-Rating.com
The usage of this website constitutes acceptance of the following legal information. Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website, including information about the cryptocurrencies and bitcoin is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Crypto Rating shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about cryptocurrencies. The entire responsibility for the contents rests with the authors. Reprint of the materials is available only with the permission of the editorial staff.