A crypto investor has placed a substantial wager on the price of the leading cryptocurrency dropping below $110,000 by early August, anticipating a decline of at least 8%. This was reported by Bloomberg.
On July 23, the trader purchased put options on Deribit with a strike price of $110,000 and an expiration date of August 8. According to prime broker FalconX, the contract cost him approximately $5 million in premiums. The transaction was executed in two stages — for 3000 and 2000 BTC. The total nominal value of the option exceeded $550 million.
“This is likely the largest single-sided block trade in dollar nominal value in Deribit’s history,” said Griffin Sears, head of derivatives at FalconX’s New York division.
He noted that the size, structure, and short-term nature of the deal indicate “high institutional-level confidence.” According to him, it is telling that such a volume of risk was realized through a single position rather than a complex combination, pointing to a “clearly defined strategy.”
“Traders could also use similar structured bets to hedge short-term fluctuations or play on volatility,” the agency writes.
The crypto derivatives market is still in its early stages compared to traditional options segments. However, the size and structure of the deal indicate growing risk appetite from institutional investors, analysts noted.
“This deal is significant not only for its volume […]. It shows how far the crypto options market has advanced in terms of depth and ability to handle institutional-scale flows,” noted Nicholas Quattravo, head of Paradigm for the EMEA region.
The lion’s share of trading volume in the current market phase is accounted for by derivatives: futures, options, and perpetual swaps. Open interest on Deribit has exceeded $40 billion.
At the time of writing, the leading cryptocurrency is trading around $115,740. Over the past 24 hours, the asset has depreciated by 2.5%, according to CoinGecko.
Back in June, the options market witnessed investors’ inclination to hedge against the risk of Bitcoin falling to the $100,000 mark.