Bitcoin options volume on Deribit highest in 22 months

Bitcoin options worth $2.4 billion have changed hands on Deribit during the last 24 hours, the highest single-day figures since May 17, 2021

Trading in bitcoin (BTC) options listed on crypto currency exchange Deribit has surged amid U.S. bank failures and ensuing market volatility.

Bitcoin options worth $2.4 billion have changed hands on Deribit during the last 24 hours, the highest single-day figures since May 17, 2021, as per data tracked by Amberdata. The number of contracts traded during the last 24 hours was at a record high of 99,195 BTC. The 24-hour notional volume in ether options was $948 million at one time, the highest since November.

On Deribit, one options contract represents 1 BTC and 1 ETH. The exchange manages over 80% of the crypto options market globally. Options give traders the right to buy or sell the underlying asset, in this case, bitcoin, at a particular price, known as a strike, by a mentioned date. Call options give the right to buy, while put options give the right to sell.

Three U.S. banks have collapsed in less than a week, bringing in volatility into financial markets and compelling crypto as well as conventional markets traders to look for hedges via options. Volume in options tied to fear gauge of Wall Street, the VIX index, surged to a four-year high in the past week, as per Reuters.

Bitcoin was initially under pressure when Silicon Valley Bank shut down on Friday but recovered over the weekend. Prices have increased around 25% since late Friday, with prices rising 9% during the past 24 hours, as the banking crisis has weakened the case for continued monetary tightening by the Federal Reserve.

Bitcoin’s seven-day annualized implied volatility, the market’s assumption of price turmoil in the short term, increased to a four-month high of 90% early Tuesday. The 30-, 60-, 91- and 180-day gauges have also moved up, suggesting more demand for options. A similar pattern is seen in the ether options market, where the seven-day implied volatility increased to a two-month high of 77% early Tuesday.