The cryptocurrency and Bitcoin market is experiencing quite a revival in October. One of its symptoms is a sharp increase in the volume of open interest in BTC derivatives.

Open interest in derivatives markets is a good indicator of the health of the cryptocurrency market. It suggests that investors from the traditional finance market (TradFi) are increasingly directing their attention and funds to Bitcoin.

The strong upward movement in the BTC price led to a new all-time high (ATH) in the BTC options market.

Derivatives: Options vs. Futures

Options are the rights held by the owner to be able to buy or sell an asset at some future date at a specified price. The price of execution is determined at the beginning of the contract.

At that time, the price for acquiring the option – the premium – is also paid.

Futures contracts are agreements to buy or sell an asset at some future date at a specified price. The fixed price is called the future price.

Both options and futures contracts are financial derivatives. Their development and fluctuation depend on the underlying assets, such as stock indexes, currency pairs, or the spot price of BTC, for example.

Both instruments can be used with leverage, i.e., exposed to a higher nominal value than the invested funds.

On the other hand, the differences between the two include the way positions are liquidated, prices or symmetric or asymmetric guarantees.

Open Interest in t
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Author: Jakub Dziadkowiec

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