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Bitcoin's Weekly Options Trading Volume Rises to Highest Since FTX's Meltdown

The crypto options market is recovering from the hangover of crypto exchange FTX's collapse that left several market makers and trading firms reeling.

  • The total volume of bitcoin options on Deribit rose to $4.25 billion last week, the highest since Sam Bankman Fried's FTX exchange, formerly the third largest in the world, went bust in the second week of November.

  • That's a 375% rise from the low of $895 million registered in the final week of December, according to data source provider Amberdata. Deribit is the world's largest crypto options exchange, accounting for nearly 90% of the global trading volume and open interest.

  • The impressive recovery in volume has mainly been driven by an uptick in demand for call options or bullish bets offering protection against price rallies.

  • "The share of calls relative to put volume is currently at more than 66%, its highest level in over a year," analysts at Kaiko Research said in a note to clients on Monday. "This is yet another indicator that sentiment has improved in January."

  • The dollar value locked in the number of open options contracts, also known as open interest, has increased to $5.92 billion, the highest since Oct. 27. Bitcoin's (BTC) price has rallied by nearly 40% this month.

  • An uptick in open interest alongside a price rally suggests an influx of new money on the bullish side and is said to confirm the uptrend.

  • Options are derivative contracts that offer the purchaser the right but not the obligation to buy or sell the underlying asset at a predetermined price on or before a specific date. The call option gives the right to buy, while put options offer the right to sell.

  • Options are widely used by both institutions and individual investors and often provide an accurate picture of sentiment in the broader market.