Liam Frost · 2 days ago · 2 min read
News › Ethereum › Analysis
Fund manager: Ethereum’s largest investors are fueling option market’s parabolic rise
Ethereum’s market landscape has been shifting significantly in recent times.
The popularity of trading altcoins like ETH with leverage has grown significantly since 2017, as the liquidity on trading platforms like Bitfinex has made this a popular method for traders to profit from the crypto’s volatility.
The Ethereum options market is the latest segment of the crypto’s investment landscape to see massive growth, with the total open interest for ETH options rocketing in recent months.
One prominent fund manager is now noting that some of the cryptocurrency’s largest investors are behind the growth that its options open interest has seen over the past few months.
Ethereum options market sees a massive rise in open interest
Bitcoin’s options market has been seeing tremendous growth throughout the past couple of years, but these products have not been as popular for altcoins like Ethereum until recently.
Now, the open interest (OI) for ETH options on popular trading platform Deribit is going parabolic, reaching levels that are more than triple the average OI seen over the past 12 months.
The below chart from the blockchain analytics platform Skew elucidates this trend, showing just how rapidly the ETH options market has grown.
Skew also notes that the current size of the Ether options market is similar to the size of Bitcoin’s in December of 2018. Since then, OI for BTC options has grown by many multiples.
“The size of the Ether options market today… is the size of the Bitcoin options market in 2018.”
This growth has likely been primarily driven by investors who are taking positions on the crypto in anticipation of it seeing some massive volatility in the near-term.
The explosive popularity of the DeFi sector has boosted Ethereum’s fundamentals and has led to a general sense amongst traders that the crypto’s long-term outlook is bright.
Largest ETH investors may be driving the options market’s growth
Retail traders aren’t the only ones who are starting to employ options to profit from Ethereum’s volatility.
According to Su Zhu – the CEO of Three Arrows Capital – some of the “largest Ether holders in the world” are partially behind the growth ETH options OI has seen as of late.
He spoke about this in a recent post, saying:
“Can confirm some of the largest ether holders in the world are now active in the ETH options market on [Deribit].”
Ethereum options will help provide a new dynamic to its market that could benefit it in the long-term.
That being said, investors will now have to closely watch to see how monthly, quarterly, and yearly option contract expiries impact its price action.