After the devastating May crash, August 2021 marked the first month of actual recovery for Bitcoin and Ethereum, as both assets were able to recapture important resistance levels. Over the previous few weeks, Bitcoin initially managed to take a place above $42,000, and was now consolidating above the $50k mark. Ethereum re-tested $4000 earlier, and was only about $400 away from its ATH.
The optimism available in the market has introduced again futures premiums within the trade, as each BTC and ETH recorded sturdy derivatives volumes. However, despite a drawdown, ETH options continued to register a higher amount of engagement over the past month.
Bitcoin, Ethereum Choices, and the DVOL break?
Earlier than contemplating choices information, trying on the Deribit Implied Volatility Index or DVOL advised that it at the moment ranged round 90 for BTC and 110 for ETH. Alongside that, at-the-money volatility term structure was also less than 70%, which means that currently, price movements are expected to be timid.
With each Bitcoin and Ethereum cautiously shifting up, and sideways in the market, expectations have aligned with its trajectory as well.
Now, in line with information, the whole turnover within the month of August was round ~$60 billion, which was roughly 48% larger than in July 2021. The daily average notional turnover was $1.9 billion. It is still under its peak from May 2021.
When it comes to choices turnover, 382,406 BTC and 1,400,732 ETH choices contracts had been traded in August 2021, which had been up by 29% and 21% respectively, since July 2021.
Now, as observed, irrespective of the larger trend, Ethereum Options has consistently registered more engagement than Bitcoin Options, since January 2021 and as per data, NFTs played a major role in it.
The NFTs and Establishments concoction for ETH
For the bigger market, NFTs had been a supply of curiosity over the previous few weeks however for the derivatives market, it was a inexperienced sign for institutional merchants to exhibit that bullish habits. During the month of August, Deribit increased its options market share to 94.7% of the total OI in Ethereum Options.
Moreover, 536k ETH choices contracts received traded by way of block trades, reaching a 22% notional turnover share of the whole ETH choices contracts traded on Deribit. 86% of the total ETH block turnover was in call options and only 14% in put options.
Therefore, with out being part of the futures market, NFTs had an influence on futures merchants as properly, as the sentiment carried over in the derivatives network.
