- Recently, Bitcoin’s impressive surge beyond $35,000, after 17 months, triggered a domino effect within the market.
- The Bitcoin options trading volume on the Chicago Mercantile Exchange (CME) is preparing to reach an all-time high by exceeding $2 billion in monthly volume.
- Open positions in Bitcoin options are showing signs of slow recovery and currently stand at $1.15 billion on a monthly basis.
With the price of Bitcoin reaching a 17-month high, the market is starting to revive: Investors are turning to call options.
Bitcoin’s Rally Boosts the Market
Bitcoin’s impressive surge beyond $35,000, after 17 months, triggered a domino effect within the market. As a direct response to this surge, on October 23, $275 million worth of USD nominal value short positions were liquidated. According to the Bitfinex Alpha Report, the magnitude of these short liquidations marks the largest event since January 2023.
This development aligns with recurring patterns of increased volatility and rising trading volume across the crypto sector. On October 24, an additional $153 million worth of short positions were liquidated due to the continued upward price trend. Considering the market’s inherent volatility and sudden retracements, $200 million worth of long positions were liquidated over these two days. These long positions resulted in punishing particularly late long position holders, costing them $130 million.
October emerged as a significant period for institutional participation in Bitcoin. The Bitcoin options trading volume on the Chicago Mercantile Exchange (CME) is preparing to reach an all-time high by exceeding $2 billion in monthly volume. According to the latest report from Bitfinex Alpha, this indicates a revival of market activity and underscores Bitcoin’s appeal to institutional investors.
Moreover, open positions in Bitcoin options are showing signs of slow recovery and currently stand at $1.15 billion on a monthly basis. While it hasn’t reached the historical peak of approximately $1.69 billion, this trend indicates that institutional interest is steadily recovering.
Investors Flock to Bitcoin Call Options
While overall options market activity is rapidly increasing, one of the “preferred instruments” for many investors to capitalize on Bitcoin’s upward potential has become call options.
Bitfinex Alpha observed a significant 4.3 billion-dollar increase in open interest in October alone, pushing the total to an impressive $9.7 billion, reflecting an 80% surge. These figures reveal that both experienced and new investors are allocating substantial funds to options.
The increase in open positions for call options, while not showing an immediate upward trend, is significant because a large portion of the new open interest is connected to year-end futures options. This change in risk appetite and investment strategy reflects strong confidence in long-term value appreciation. The options market is now equally significant in terms of size and importance as the futures market and is becoming increasingly crucial in the overall Bitcoin trading landscape.
