# Cryptoverse: Is bitcoin out of the woods? Consider the options Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-02-07 Category: TRADING Category URL: https://financedigest.com/category/trading Meta Title: Bitcoin and Ether Options Trading Surge: Are These Meta Description: Find out how the surge in bitcoin and ether options trading may indicate a bullish sentiment and increased appetite for upside potential in the crypto markets. URL: https://financedigest.com/cryptoverse-is-bitcoin-out-of-the-woods-consider-the-optionshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-02-07t061306z1lynxmpej16074rtroptp4fintech-crypto-weekly-1736814478340-compressed.jpg) By Medha Singh, Lisa Pauline Mattackal and Vidya Ranganathan (Reuters) – Have bitcoin and ether finally turned a corner? It’s looking that way, if crypto options traders are anything to go by. The volume of [bitcoin options](https://www.financedigest.com/cryptoverse-bitcoin-traders-like-their-options.html "Cryptoverse: Bitcoin traders like their options") traded on Deribit, one of the leading exchanges for crypto-focused derivatives products, jumped 82% in January versus December, according to crypto market maker OrBit Markets. Ether options swelled 38%. More investors are positioning for price gains, with the volume skewed to bullish call options – [paying a premium](https://www.financedigest.com/finnish-businessman-zilliacus-ready-to-pay-premium-for-manchester-united.html "Finnish businessman Zilliacus ready to pay premium for Manchester United") for an option to buy bitcoin or ether at a future date and agreed price – rather than the conversely bearish put options to sell. Calls commanded 71.1% of total bitcoin [futures open](https://www.financedigest.com/the-future-of-open-finance.html "The Future of Open Finance") interest, and 77.5% for ether, according to Deribit data. You’ve actually seen a couple people trading in $50,000 calls, for example, that’s been the general appetite that we’ve seen – just increased appetite for upside,” said Chinedu Ume-Ezeoke, quantitative research analyst at [data firm](https://www.financedigest.com/sterling-holds-firm-after-uk-jobs-data-muddies-rate-outlook.html "Sterling holds firm after UK jobs data muddies rate outlook") Laevitas. Yet the surge in volumes also indicates [investors are in two minds about the direction of crypto](https://www.financedigest.com/dollar-catches-breath-while-investors-await-midterms-cryptos-skittish.html "Dollar catches breath while investors await midterms; cryptos skittish") markets, preferring low-risk, low-reward options to actually buying bitcoin or ether. The surge in the options markets, after months of tame trading and depressed volatility, coincides with a 40% leap in the price of [bitcoin in January – its best month since](https://www.financedigest.com/dollar-retreats-headed-for-biggest-weekly-loss-since-mid-january-bitcoin-down.html "Dollar retreats, headed for biggest weekly loss since mid-January; bitcoin down") October 2021 – and a 32% jump for ether. Bitcoin’s rally was explosive, almost like imagining the release of a beach ball that had been forced under water,” said Joe Ziolkowski, the CEO of Relm, a [digital asset insurer](https://www.financedigest.com/insurers-beware-fraudsters-love-digital.html "INSURERS BEWARE: FRAUDSTERS LOVE DIGITAL!"). ![Jump in option trades](https://www.globalbankingandfinance.com/wp-content/uploads/2023/02/chart-1.jpg) FEARS OF A PULLBACK Total bitcoin futures [open interest – which measures the number of contracts yet](https://www.financedigest.com/four-years-of-open-banking-2022-may-be-the-best-year-yet.html "Four years of Open Banking: 2022 may be the best year yet ") to be settled – across all expiries was 293,000 on Jan 27, the highest since November, while the put-to-call ratio was 0.42, the lowest in at least a year, according to Laevitas data, indicating traders were favoring calls over puts. This is [driven by renewed investors demand](https://www.financedigest.com/turkeys-economy-grew-7-6-in-q2-driven-by-domestic-demand-exports.html "Turkey’s economy grew 7.6% in Q2 driven by domestic demand, exports") for call options as they expect spot momentum to continue higher,” said Pulkit Goyal, vice-president of trading at OrBit Markets. The [trend in futures](https://www.financedigest.com/future-focus-four-trends-reshaping-financial-services.html "Future focus: four trends reshaping financial services") may not necessarily be bullish for bitcoin or ether, though, as investors also use these derivatives as hedges against falls in their other investments. People are interested in the upside potential of bitcoin and ether, but also concerned about a potential pullback after the massive run-up in prices,” said CK Zheng, founder of crypto derivatives-focused [hedge fund](https://www.financedigest.com/what-is-a-hedge-fund.html "What Is A Hedge Fund") ZX Squared. “On both sides of the equation, people are trying to get some protection.” [RISK & RECESSION](https://www.financedigest.com/high-inflation-recession-risk-widen-ecb-dilemma.html "High inflation, recession risk widen ECB dilemma") REAR The macro backdrop of a potential U.S. recession or that of further tightening by the Federal Reserve is just one among several factors that could derail the latest rally. After U.S. jobs data came in better than expected last week, [markets are betting that the Fed](https://www.financedigest.com/markets-start-signalling-fed-may-be-going-too-far-amundi.html "Markets start signalling Fed may be going too far – Amundi") may hike interest rates further than initially expected, which could douse demand for riskier assets such as cryptocurrencies. “We’re probably not out of the woods yet,” said Ume-Ezeoke at Laevitas. “In the short term, a lot of people are anticipating some sort of correction.” (Reporting by Vidya Ranganathan in Singapore, Lisa Pauline Mattackal and Medha Singh in Bengaluru; Editing by Pravin Char) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---