Echoes of Bitcoin’s 2021 Record Run Emerge in the Derivatives Market

A burst of activity in Bitcoin derivatives has evoked memories of the period in late 2021 when the token surged to an all-time high.

Variables such as the cost of perpetual futures trades and options open interest point to a revival in speculative gusto for Bitcoin, which has more than doubled in price this year in a partial rebound from a 2022 rout.

The increased attention stems partly from expectations that the first US spot Bitcoin exchange-traded funds may soon get regulatory assent, opening up the asset to more investors. The likely level of ETF inflows is an open question but the possibility of greater demand is enough to spur chancy trades.

A spokesperson for Deribit, the largest crypto options exchange, said the notional value of Bitcoin options open interest on the platform reached a record of roughly $14.9 billion earlier this week. That topped the $14.4 billion achieved in October 2021 just before Bitcoin hit its high of almost $69,000. Open interest refers to outstanding contracts that have yet to be settled.

“Crypto call options were in strong demand for the past few weeks,” said Caroline Mauron, co-founder of digital-asset derivatives liquidity provider Orbit Markets. While some traders placed leveraged bets on a “large breakout” to $100,000 or beyond, the more immediate test is the $38,000 level, she said.

Bitcoin neared $38,000 on Thursday before falling back and was trading at $36,264 as of 3:33 p.m. in Singapore on Friday. Three charts below highlight key trends from the futures and options market for the largest digital token.

Forever Futures

Bulls Pay Up