According to Bloomberg, the digital-asset derivatives market is experiencing a surge in demand from traditional institutional investors, fueled by this year's massive rebound in cryptocurrencies. Trading volume for Bitcoin options has reached an all-time high, with a notional value of $11 billion expiring on Friday, consisting of $7.7 billion in Bitcoin contracts and $3.5 billion in Ether options. Luuk Strijers, Deribit's chief commercial officer, believes that the largest-ever options expiry may result in above-average trading activity but is unlikely to have a significant impact on spot market prices.
Clients are rolling positions to 2024 expiries, and Strijers expects to see more of this activity closer to the expiry and afterward. The focus will then shift to the upcoming ETF decision, which has been a driving factor behind the crypto market's strong rally this year. Bitcoin has risen almost 160% after a series of industry scandals sent digital asset prices plunging in 2022. The recovery has been partly driven by optimism that spot Bitcoin ETFs will be approved, attracting a wider range of investors to the asset class.
Trading volumes in both spot Bitcoin and derivatives have increased since traditional asset managers like BlackRock Inc. filed their applications for such ETFs. Ryan Kim, head of derivatives at digital-asset prime brokerage FalconX, has observed increased participation from crossover macro accounts and crypto-focused hedge funds. Perpetual futures, a popular way for crypto traders to leverage their bets, are trading at a significant premium in price to spot, indicating growing demand.
