In terms of Bitcoin futures, the weekly trading volume increased by more than 20% month-on-month, and positions continued to set historical records. Among them, CME’s position value doubled within a month, making it the world’s largest BTC futures platform in terms of position value. In terms of options, the popularity of Bitcoin options trading continues unabated. The trading volume of CME is three times that of last week, and the trading volume of Ethereum options has decreased by 20% month-on-month. One-month realized volatility and one-month at-the-money option implied volatility continue to rise for Bitcoin and Ethereum.
Written by Karen
Weekly market dynamics
Deribit launches Bitcoin options contracts with strike prices of $30 and $400,000.
Futures Market
Overview of extreme market liquidation
On Monday, Bitcoin fell by more than $8,000, a drop of more than 21%. On that day, Bitcoin liquidated $1.18 billion, of which long positions liquidated $1.013 billion, and the entire network liquidated $1.862 billion.
Statistics on Bitcoin futures liquidation data of BitMEX, Binance, Bybit, Huobi and OKEx, source: Futangdi
Trading volume
The statistical scope of Bitcoin futures includes BitMEX, Binance, Bitfinex, Bakkt, Bybit, CME, Deribit, FTX, Huobi and OKEx. The statistical scope of Ethereum futures includes BitMEX, Binance, Bitfinex, Bybit, Deribit, FTX, Huobi and OKEx.
After increasing by nearly 70% last week, Bitcoin trading volume increased by more than 21% in the past week, reaching $606.626 billion. Among them, Bitcoin trading volume reached $161 billion on Monday, setting a single-day record. As Bitcoin gradually rose back to around $40,000 after plunging 20% on Monday, investors' enthusiasm for trading continued unabated.
Bitcoin futures contract trading volume, source: Skew
Ethereum’s weekly trading volume fell less than 4%, but remains high.
Daily trading volume of Ethereum futures contracts, source: Skew
Open positions
The violent fluctuations in Bitcoin prices did not have an impact on the value of Bitcoin positions. On the contrary, after a slight decline on Monday, it gradually recovered and continued to set a historical record. As of January 14, the value of positions was $12.71 billion, an increase of 6% from a week ago.
Bitcoin futures contract open interest, source: Skew
It is worth noting that the position value of CME, which only accounts for less than 3% of the trading volume, has reached a historical record of US$2.4 billion, an increase of 50% from the beginning of 2021 and a surge of nearly 120% from a month ago. It is the world's largest BTC futures platform in terms of position value. On the other hand, although Bakkt's position value is around US$50 million, Bakkt has been trading at around US$50 million since January. The position situation is also significantly better than in 2020. This shows that institutional investors’ interest in Bitcoin has surged in the past month.
Open interest and volume on CME, source: Skew
Bakkt’s open interest and volume, source: Skew
In contrast, Ethereum holdings fell by more than 25% on January 11. Although they are still near highs, they have not yet recovered the historical record set last week (around $3.6 billion).
Ethereum futures open positions, source: Skew
funding rate
Compared with the previous week, Binance’s weekly average funding rate dropped from 0.1049% to 0.0801%, BitMEX continued to be around 0.06%, and Deribit and Bybit’s funding rates both rose to around 0.08%.
Comparison of Bitcoin perpetual contract funding rates across exchanges
On Ethereum, BitMEX’s weekly average funding rate continued to rise to 0.2929%.
Comparison of Ethereum perpetual contract funding rates across exchanges
Options Market
Trading volume
Bitcoin options statistics include Bakkt, Bit.com, CME, Deribit, Huobi, LedgerX and OKEx. Ethereum options statistics range from Bit.com, Deribit, Huobi and OKEx.
The weekly trading volume of Bitcoin options was US$9.721 billion, continuing to set a single-week trading volume record, an increase of nearly 4% month-on-month. Among them, CME’s trading volume was 3.18 times that of last week.
Ethereum’s weekly trading volume decreased by more than 20% month-on-month to $1.028 billion.
Ethereum options daily trading volume, source: Skew
Open positions
Bitcoin and Ethereum options open interest continue to be near all-time highs, not much different from last week, at $10.583 billion and $1.822 billion respectively.
Bitcoin options open interest, source: Skew
Ethereum options open interest, source: Skew
Volatility
Implied volatility measures the market’s expectations for future volatility. An increase in implied volatility means a corresponding increase in the time value of the option, and conversely, a decrease in the time value. In other words, if the volatility can be predicted relatively accurately, then you only need to buy when the volatility is high and sell when the volatility is low, and you can achieve better returns.
Bitcoin’s one-month realized volatility and one-month at-the-money (ATM) implied volatility both continue to rise, rising to around 95% and 137% respectively.
From left to right are Bitcoin’s one-month realized volatility and Bitcoin’s one-month ATM implied volatility
Ethereum’s one-month realized volatility has also increased from 81% on January 1 to 133% currently, and one-month at-the-money implied volatility is currently around 170%.
From left to right are the one-month realized volatility of Ethereum and the one-month ATM implied volatility of Bitcoin
In terms of volatility, the volatility of Bitcoin and Ethereum continues to rise. Although there is still more room than the highs in the middle of last year, we still need to pay attention to the risks caused by high volatility. Judging from the position status, Bitcoin's futures position value recovered quickly after following the price decline on Monday, and CME positions hit a historical record, showing that retail investors and institutional investors are still optimistic about the market outlook.
Option expiration status
32,300 Bitcoin options contracts will expire today with a notional value of over $1.243 billion, and 103,300 contracts will expire on January 29 with a notional value of $3.977 billion.
Bitcoin options expiration, source: Skew
In Ethereum options, 171,300 contracts will expire today, with a notional value of approximately $210 million, and nearly 290,000 contracts will expire on January 29.
Ethereum option expiration status, source: Skew