115 Interactions, 2 Today
Following the terrible May crash, August 2021 was the first month of true recovery for Bitcoin and ETH, as both assets were able to reclaim key resistance levels. Over the last two weeks, Bitcoin has managed to gain a position above $42,000 and is presently consolidating above the $50,000 barrier. Ethereum has previously re-tested $4000 and was only approximately $400 away from its all-time high.
The market’s optimism has restored futures premiums in the industry, as both BTC and ETH witnessed high derivatives volumes. Despite this, ETH options have maintained a greater level of activity over the previous month.
Bitcoin, Ethereum Options, and the DVOL break?
Before delving into options data, the Deribit Implied Volatility Index, or DVOL, indicated that it was currently hovering around 90 for BTC and 110 for ETH. Furthermore, the at-the-money volatility term structure was less than 70%, indicating that price moves are projected to be cautious for the time being.
With Bitcoin and Ethereum gradually moving up and sideways in the market, expectations have also matched with their trajectory.
Now, according to data, the total turnover in the month of August was around ~$60 billion, which was approximately 48% higher than in July 2021. The daily average notional turnover was $1.9 billion. It is still under its peak from May 2021.
Before considering options data, looking at the Deribit Implied Volatility Index or DVOL suggested that it currently ranged around 90 for BTC and 110 for ETH. Alongside that, at-the-money volatility term structure was also less than 70%, which means that currently, price movements are expected to be timid.
With both Bitcoin and Ethereum cautiously moving up, and sideways in the market, expectations have aligned with its trajectory as well.
The NFTs and Institutions concoction for ETH
NFTs have been a source of interest in the bigger market in recent weeks, but for the derivatives market, it was a green signal for institutional traders to display that optimistic behaviour. Deribit boosted their options market share in August to 94.7 percent of total OI in Ethereum Options.
Furthermore, 536k ETH options contracts were traded via block trades, accounting for a 22 percent notional turnover share of all ETH options contracts traded on Deribit. Call options accounted for 86 percent of total ETH block turnover, while put options accounted for only 14 percent.
Hence, without being a part of the futures market, NFTs had an impact on futures traders as well, as the sentiment carried over in the derivatives network.