Amid the upcoming U.S. election, a significant institution has made a bold move by investing $25 million in Derive’s Bitcoin options market. The institution has implemented a complex strategy that could potentially yield substantial profits if Bitcoin reaches $80,000 by the end of November.
This strategic investment comes at a time when trading volumes in the crypto market are on the rise due to increased betting and hedging activities related to the political event. The outcome of the election is expected to have a significant impact on the regulatory environment for cryptocurrency in the United States, the world’s largest economy.
The institution’s strategy involves a multi-legged options trade on Derive’s decentralized derivatives exchange. They have acquired 100 call option contracts with a strike price of $70,000, set to expire on November 29. At the same time, they have written or sold 200 contracts of the $80,000 call and 100 contracts of the $50,000 put, both expiring on the same date. To secure the trade, the institution has deposited eBTC as collateral, which allows them to earn passive yields on their investment.
This innovative strategy resembles a ratio call spread funded by a short put position, with the potential to generate the highest profits if Bitcoin reaches $80,000 by the expiration date. This aligns with the expectations of a post-election rally to $80,000 and beyond, as indicated by options flows on centralized exchanges.
Nick Forster, the co-founder of Derive, views this $25 million options trade as a significant milestone for onchain options trading. He believes that the strategic positioning of the trade, along with the unique structure involving sold puts, bought calls, and eBTC collateral, could result in a profit of $1,020,000 if Bitcoin hits $80,000 by November 29.
Forster emphasizes the scalability and non-correlated yield potential of onchain options, highlighting how they offer a new avenue for generating profits from onchain assets. Derive, as the largest onchain options platform, accounts for a significant portion of the total DEX options volume in the past 24 hours, indicating the growing interest in decentralized options trading.
While the onchain options market is still relatively small compared to centralized platforms like Deribit, the recent $25 million investment signals a growing trend towards decentralized trading solutions. As the cryptocurrency market continues to evolve, innovative strategies like the one implemented by this institution showcase the potential for significant returns in the emerging asset class.
In conclusion, the institution’s investment in Derive’s Bitcoin options market underscores the increasing interest in cryptocurrency trading ahead of the U.S. election. This strategic move not only demonstrates confidence in Bitcoin’s price trajectory but also highlights the growing importance of decentralized trading platforms in the evolving financial landscape. As investors navigate the uncertain waters of the crypto market, innovative strategies like the one employed by this institution could pave the way for new opportunities and higher returns in the digital asset space.