Crypto Options’ Daily Volume Hit 2023 ATH with $3B+ in Notional Value

Crypto options daily trading volume surged above $3 billion in notional value on Feb. 16, the highest in 2023. The jump came from a recent crypto market rally, boosting Bitcoin above the $25,000 mark on Wednesday.

Deribit Accounts for 90% of Crypto Options Trading Volume

Crypto options trading volume reached a 2023 peak on Feb. 16, surging beyond $3 billion, according to data analytics firm Laevitas. Deribit, the world’s biggest crypto options exchange, accounted for around $2.75 billion of that volume, translating to around 90%. Meanwhile, the trading volume of perpetual contracts remained high at $144 billion.

The new options trading volume high follows the latest crypto rally that boosted Bitcoin (BTC) above the $25,000 threshold on Thursday. Other tokens, including Ether (ETH), Cardano (ADA), and Avalanche (AVAX), also rose higher yesterday.

The Thursday rally came as investors shook off worries over a regulatory clampdown by US regulators on certain crypto products. Earlier this week, a New York regulator ordered the crypto firm Paxos to stop issuing the Binance stablecoin, Binance USD (BUSD). In response, Paxos said it “categorically disagrees” with the regulator’s stance and is “prepared to vigorously litigate” if needed.

Bitcoin rallied more than 43% since the start of the year, marking a strong rebound from last year’s downturn amid a very harsh crypto winter. Blockchain adviser Cici Lu said the recent momentum in the crypto market is forcing speculators to reconsider their bearish bets, further boosting the prices.

Lu argued that investors “forget the free float of Bitcoin can be limited at times and when shorts get squeezed the price just pops.” Coinglass data shows that around $64.5 million of short positions in Bitcoin were liquidated on Feb. 16, the highest in around a month.

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Investors Optimistic Interest Rate Hikes Will Not Cause Recession

Another factor that likely contributed to the recent crypto rally is the hope that interest rate hikes by the Federal Reserve can further bring down inflation without tipping the US economy into a recession. Earlier this week, the latest consumer price index (CPI) print showed that inflation slightly declined in January to 6.4%.

However, even though inflation fell for a seventh consecutive month, the Fed is unlikely to stop raising interest rates. The reason for this is that some sources of inflation remain difficult to tame, such as the hot labor market and increasing wages.

Bitcoin and other cryptocurrencies lost some of their gains on Friday, with the world’s biggest crypto token dropping nearly 3% in the past 24 hours to $23.878.

Do you think the crypto market will retain its current momentum in the coming weeks? Let us know in the comments below.