In terms of Bitcoin futures, the weekly trading volume increased by more than 20% month-on-month, and positions continued to brush historical records. Among them, the value of CME holdings doubled within a month, and the world’s largest BTC futures platform jumped to the world’s largest BTC futures platform based on holdings. In terms of options, the popularity of Bitcoin options trading has continued unabated. The trading volume of CME was three times that of last week, and the trading volume of Ethereum options decreased by 20% from the previous week. The one-month realized volatility of Bitcoin and Ethereum, and the implied volatility of one-month fair value options continue to rise.
Written by: Karen
Weekly market dynamics
Deribit launched Bitcoin option contracts with exercise prices of USD 300,000 and USD 400,000.
Futures market
Overview of extreme market liquidation
On Monday, Bitcoin fell more than 8,000 US dollars, a drop of more than 21%. On the same day, Bitcoin liquidated US$1.18 billion, of which long positions liquidated US$1.013 billion and the entire network liquidated US$1.862 billion.
BitMEX, Binance, Bybit, Huobi and OKEx Bitcoin futures liquidation data statistics, source: Contract Emperor
Trading volume
The statistical scope of Bitcoin futures includes BitMEX, Binance, Bitfinex, Bakkt, Bybit, CME, Deribit, FTX, Huobi and OKEx. The statistical scope of Ethereum futures includes BitMEX, Binance, Bitfinex, Bybit, Deribit, FTX, Huobi and OKEx.
After increasing by nearly 70% last week, Bitcoin transaction volume increased by more than 21% in the past week, reaching 606.626 billion U.S. dollars. Among them, Bitcoin transaction volume this week reached 161 billion U.S. dollars, setting a single-day record. As Bitcoin gradually rose back to around $40,000 after a sharp drop of 20% on Monday, investors’ enthusiasm for trading continued unabated.
Bitcoin futures contract trading volume, source: Skew
Although Ethereum’s weekly trading volume has fallen by less than 4%, it is still at a high level.
Ethereum futures contract daily trading volume, source: Skew
Open positions
The violent fluctuations in the price of Bitcoin did not have an impact on the value of Bitcoin holdings. On the contrary, after a slight decline on Monday, it gradually recovered and continued to brush historical records. As of January 14th, the value of holdings was 12.71 billion US dollars, an increase of 6% from a week ago.
Open positions in Bitcoin futures contracts, source: Skew
It is worth noting that CME, which accounts for less than 3% of the trading volume, has a position value of US$2.4 billion, a historical record. It is an increase of 50% from the beginning of 2021 and a significant increase of nearly 120% from a month ago. Seen as the world’s largest BTC futures platform, on the other hand, although Bakkt’s holdings are around US$50 million, Bakkt’s holdings since January are also significantly better than 2020. This shows that institutional investors’ interest in Bitcoin has soared in the past month.
CME’s open positions and trading volume, source: Skew
Bakkt’s open positions and trading volume, source: Skew
In contrast, the value of Ethereum holdings fell by more than 25% on January 11. Although it is still near the high level, it has not yet recovered the historical record set last week (about 3.6 billion US dollars).
Open positions in Ethereum futures, source: Skew
Funding rate
Compared with the previous week, Binance’s weekly average funding rate dropped from 0.1049% to 0.0801%, BitMEX continued to stay near 0.06%, and the funding rates of Deribit and Bybit both rose to around 0.08%.
Comparison of Bitcoin Perpetual Contract Funding Rates of Various Exchanges
As for Ethereum, BitMEX’s weekly average funding rate continued to rise to 0.2929%.
Comparison of Ethereum Perpetual Contract Funding Rates of Various Exchanges
Option market
Trading volume
The scope of Bitcoin options statistics includes Bakkt, Bit.com, CME, Deribit, Huobi, LedgerX and OKEx. The scope of Ethereum options statistics is Bit.com, Deribit, Huobi and OKEx.
The weekly trading volume of Bitcoin options was 9.721 billion U.S. dollars, continuing to set a weekly trading volume record, increasing by nearly 4% from the previous month. Among them, the trading volume of CME was 3.18 times that of last week.
Ethereum’s weekly trading volume decreased by more than 20% from the previous month to 1.028 billion US dollars.
Ethereum options daily trading volume, source: Skew
Open positions
Bitcoin and Ethereum option holdings continue to be near historical highs, which are not much different from last week, reaching 10.583 billion US dollars and 1.822 billion US dollars respectively.
Open positions in Bitcoin options, source: Skew
Open positions in Ethereum options, source: Skew
Volatility
Implied volatility measures market expectations of future volatility. An increase in implied volatility means a corresponding increase in the time value of the option, and vice versa means a decrease in the time value. In other words, if the volatility can be predicted more accurately, you only need to buy when the volatility is high and sell when the volatility is low, and you can achieve better returns.
Bitcoin’s one-month realized volatility and one-month at-the-money option (ATM) implied volatility both continued to rise, rising to around 95% and 137% respectively.
From left to right, one-month realized volatility of Bitcoin and one-month ATM implied volatility of Bitcoin
The one-month realized volatility of Ethereum has also increased from 81% on January 1 to the current 133%, and the implied volatility of one-month at-the-money options is currently around 170%.
From left to right are the one-month realized volatility of Ethereum and the one-month ATM implied volatility of Bitcoin
In terms of volatility, the volatility of Bitcoin and Ethereum continues to rise. Although there is still a lot of room compared to the high point in the middle of last year, it is still necessary to pay attention to the risks caused by high volatility. From the perspective of position status, the value of Bitcoin futures positions quickly recovered after following the price decline on Monday, and CME positions set a historical record, showing that retail and institutional investors are still optimistic about the market outlook.
Option expiration
Today, 32,300 Bitcoin option contracts will expire with a nominal value of more than US$1.243 billion. On January 29, 103,300 contracts will expire with a nominal value of US$3.977 billion.
Bitcoin option expiration, source: Skew
In terms of Ethereum options, 171,300 contracts will expire today, with a nominal value of approximately US$210 million, and nearly 290,000 contracts will expire on January 29.
Ethereum option expiration status, source: Skew
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