With BTC again approaching all-time highs, a large volume of money is flowing into the Bitcoin derivatives markets. Recently, traders have been speculating on Bitcoin (BTC) on the derivatives markets, with open interest in BTC futures approaching $ 20 billion for the first time.
Now that Bitcoin has finally reached 60K it is valid to ask ourselves what can happen in the market, especially in the open interest of futures. Also in Bitcoin derivatives. But first, we must acknowledge what has happened in the last few days.
According to Glassnode, a data analysis firm, pending futures contracts hit new all-time highs on March 11. This happened with open interest in exchanges approaching $ 20 billion as we mentioned earlier.
Open interest in Bitcoin futures has grown, but options have also risen
Parallel to the futures contracts the options have also reached record volumes in 2021. The level is such that Derebit now regularly hosts more than a billion dollars in daily transactions. According to CoinMarketCap, the three largest centralized derivatives exchanges (Binance, Huobi Global, and ByBit) account for more than $ 100 billion in combined daily trading. Binance only has $ 57 billion.
However, despite increasing volumes, some decentralized derivatives exchanges appear to be struggling to attract momentum from their centralized counterparts. Ethereum’s skyrocketing fees appear to have slowed the growth of decentralized options. The reason may be linked to the complicated smart contract executions required to interact with some Ethereum-based protocols resulting in gas prices of more than US $ 1,000.
Similarly, record fees also appear to have deterred traders from Ethereum-powered decentralized futures. The daily volume of dYdX plummeted, from close to tens of billions in January to roughly $ 100 million in the past week.
On Discord, Ribbon Finance founder Julian Koh noted that the team is currently working on integrating with DeFi’s options protocol, Charm Finance, as a new source of liquidity to solve the liquidity problem.
Now, with the new all-time high, we can see much more activity in all these sectors. At the end of the day, Bitcoin will attract attention, for better or for worse. Consequently, this influences what happens in the futures and derivatives market. For now optimism seems to be growing.