Oct 27, 2023

The crypto options market is booming. The notional open interest, or the dollar value locked in active bitcoin and ether options contracts on leading exchange Deribit has risen to $20.64 billion, according to data tracked by Switzerland-based Laevitas. The tally nearly parallels the peak registered on Nov. 9, 2021, when bitcoin traded above $66,000, 90% higher than the going market rate of $34,170. In other words, the current open interest in contract terms is significantly higher than in November 2021. "The milestone has been achieved with nearly double the number of outstanding contracts, representing not just a substantial triumph for Deribit, but also a clear indicator of the broader market growth and the escalating interest in options among our clients," Luuk Strijers, chief commercial officer at Deribit, told CoinDesk. Deribit controls 90% of the global crypto options activity.

Deribit options open interest (Laevitas)

Ethereum’s Dencun upgrade, likely to take place in first-quarter 2024, is the next step in the blockchain’s journey to becoming a scalable settlement layer, Goldman Sachs (GS) said in a note Thursday. “Dencun’s primary impact will be to increase its data availability for layer-2 rollups via proto-danksharding, resulting in a reduction of rollup transaction costs which will be passed on to end users,” the bank said. A layer 1 network is the base layer, or the underlying infrastructure of a blockchain. Layer 2 refers to a set of off-chain systems or separate blockchains built on top of layer 1s. Rollups process transactions on another, faster, blockchain, or layer 2, then port the data back to the parent blockchain, at a fraction of the price.

Sam Bankman-Fried began testifying at his criminal trial Thursday without jurors present, an unusual move by the judge who wanted to review the comments first to see if they're admissible. Even though jurors weren't there to hear him, Bankman-Fried's first performance on the witness stand – delivered while he was under oath – was remarkable. The FTX founder's decision to testify is risky. While Bankman-Fried has tried to frame the collapse of his multibillion-dollar FTX crypto exchange as an unavoidable accident – he gave interviews to reporters, started a Substack newsletter and tweeted to downplay his culpability after his company filed for bankruptcy in November 2022 – he has exposed himself to tough questioning from prosecutors.

A message from Kaiko

Bankrupt crypto exchange FTX owns around $417 million of Grayscale’s Bitcoin Trust (GBTC), according to a court filing, and analysts are speculating over what this means for the price of the fund when the estate winds down those holdings.

Current FTX management has said its intention is to return funds to creditors in fiat currency rather than crypto, but plans to trade the assets – which also include sizable holdings of SOL ($1.6B), bitcoin ($560M) and ether ($192M) – carefully to avoid flooding the market and crashing prices. Along those lines, the company in August hired Galaxy Digital for assistance in executing the sales.

Though GBTC wasn’t explicitly mentioned in those plans, the news is ostensibly good for those hoping the fund’s discount to net asset value (NAV) won’t be negatively affected by an FTX fire sale.

- Omkar Godbole