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First Mover: What’s Going On With Bitcoin Derivatives?

There’s a strange trend in crypto derivatives right now: volumes have dropped precipitously, just as open interest has boomed. What’s going on?

Since the May 11 halving event, trading volume in crypto futures has fallen 76%, from $35 billion to $8.5 billion by June 23, according to research firm Skew.

Futures trading activity hit an all-year low Sunday after slumping to just $5 billion. 

Options activity may have hit a high at $226 million on June 2, but activity has still gone south. Volume came in at around $80 million June 23, down nearly 62% from its peak. 

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Derivative trading volumes usually increase during periods of pronounced volatility. On March 12, when the bitcoin price fell by nearly 40%, daily volumes clocked a record $45 billion. 

A fall in trading volumes could, therefore, be down to the fact bitcoin has been pretty dull recently.

Prices have stuck to a narrow $9,000 to $10,000 range since May 11; bitcoin has so far failed to hold its own above the crucial $10,000 threshold. 

Bitcoin’s volatility hit an eight-month low earlier this week. 

But while the number of settled contracts remains at a yearly low, open interest – the number of contracts that have yet to settle – remains high. 

Open interest in futures came to $3.8 billion, on June 23, up 50% from $2.5 billion from the start of May. On CME, open interest has risen by a staggering 1,145% since the halving, hitting a record of $436 million on June 23.


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In options, total open interest has consistently hit new highs almost every day for the past four weeks. At $1.1 billion on May 23, it hit $1.7 billion on Tuesday. 


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Investors may be adding bets to position for a big move in either direction, which is often seen following a prolonged consolidation.

In traditional markets, options traders often take “straddles,” a non-directional strategy comprises buying both calls (bullish bets) and puts (bearish bets). That could be the reason for the recent rise in the open interest in options. 

While options markets are still new in crypto, it might be that the same thing is happening here. The uptick in open interest indicates that the market is betting on a breakout – whether that’s up or down still hasn’t been decided yet.

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