Bitcoin Options Open Interest Skyrockets Past $18 Billion as Traders Anticipate SEC ETF Decision

Bitcoin options open interest has soared to unprecedented levels, surpassing the $18 billion threshold on Dec. 22, 2023. Currently, evidence indicates that bitcoin traders are leveraging bitcoin options to mitigate risk and speculate on the future price trajectories of bitcoin, particularly in anticipation of major developments such as the U.S. Securities and Exchange Commission’s (SEC) upcoming verdict on a spot bitcoin exchange-traded fund (ETF).

Traders Flock to Bitcoin Options as SEC ETF Decision Looms

In December 2023, Bitcoin options open interest hit a record peak. Bitcoin options trading entails the purchase or sale of contracts granting the bitcoin trader the option, though not the obligation, to buy or sell a foundational asset at a predetermined price by a specified date.

Traders utilize options to forecast BTC’s price shifts or to safeguard current holdings against potential price fluctuations. The SEC is set to make a decision on a spot bitcoin ETF by Jan. 10, 2023. Numerous reports indicate that bitcoin traders are guarding their investments against the volatility expected to follow the SEC’s ruling.

A favorable decision could catalyze a price increase, whereas an adverse one might trigger a downturn. Through options, traders aim to shield their portfolios from unfavorable price changes. On Dec. 22, 2023, the open interest in bitcoin options was noted to be approximately $18.33 billion.

As of Dec. 23, 2023, the open interest in bitcoin options is valued at $17.55 billion. The final quarter of the year – October, November, and December – has seen the highest options volume in BTC’s history. Records show a substantial $36.27 billion in October, $36.16 billion in November, and $34.47 billion in December to date.

“The most recent rally is being driven by leveraged/speculative money,” Ryan Kim, the lead at Falconx’s derivatives department told Bloomberg’s David Pan. “These traders could be finding it prudent to spend premium to protect their leveraged longs with some [bitcoin] puts, betting on a big move in either direction,” Kim added.

What do you think about the soaring bitcoin options ahead of the SEC decision on Jan. 10? Share your thoughts and opinions about this subject in the comments section below.