Even as bitcoin flies high, investors are keeping their options open, judging by a record race to derivatives.
Most options traders are betting on bitcoin prices jumping higher, with open interest in call options at 206,979 contracts on Deribit, more than double the bearish put options of 93,857. Options contracts give their buyers the right, but not an obligation, to buy or sell an underlying asset at a fixed price in the future. Such contracts are not only used as a lower-risk, lower-reward alternative to actually buying bitcoin, but also as a way to hedge other bets, making it a better gauge of investor participation than an indicator of price expectations.
Leo Mizuhara, CEO of digital assets management platform Hashnote, said the macro environment for bitcoin and other digital assets was turning more favorable given the Federal Reserve's large liquidity injections to shore up the banking sector. Investors are still also bullish on ether, judging by options trading. Open interest in ether on Deribit features 1.7 million call options versus 656,158 puts.