Compared to April and May, June can be considered a disappointing month for Bitcoin. A price depreciation of more than 13% summed up Bitcoin‘s turbulent second quarter. Initially, after the halving in May, many users expected Bitcoin to record a correction of almost 30% from its peak of $10,000, but crypto-active was able to maintain its consolidation above $9,000.

The credit for its higher consolidated position has been given to the Bitcoin options market. As mentioned earlier, BTC’s option contracts worth over $1 billion expired in June, with Longhash going so far as to claim that the “explosive growth of the options market” was behind Bitcoin’s recovery.

However, Deribit‘s latest newsletter suggests that the situation in June may not have been as bullish as commonly perceived.

According to the institutional bulletin shared with AMBCrypto, Deribit recorded a new record of $1.46 billion in open interest on BTC options prior to maturity, with a notional value of $746 million maturing on June 26. In total, 53% of the BTC IOs and 43% of the ETH IOs expired on Friday, making it the largest expiration of crypto options to date.

However, here’s the rub.

Source: Deribit

Total USD turnover for the month of June was 34% lower than in May. While June saw a turnover of USD 9.1 billion, the figures for May were USD 13.5 billion. Option contract volumes for Bitcoin and Ethereum did not decline, as 264,420 BTC option contracts were traded in June 2020, down 20% from May 2020.

Source: Deribit

Overall, total option sales were $2.8 billion in June 2020, a decrease of 15% from May 2020.

What is the significance of this data?

Based on the above information, one can assume that the perceived optimism for BTC options in June was quite accurate, if evaluated separately. The collective aggregation of May-June gave the appearance of an extremely bullish options market prior to expiration, but June BTC options contracts alone were lower than May 2020.

As a result, the performance of the BTC options may not have really helped Bitcoin maintain its consolidation above $9000, but the idea of it could have. The positive sentiment associated with the derivatives market was fueled in June and psychologically helped the price stay higher. The June decline was mainly due to Bitcoin’s late correction and the options market allowed the crypto-active to maintain a higher range, but it was not the only contributor.

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2020-07-02