After the FTX explosion, the Crypto options market has become a more ‘interdealer’-paradigm | Jobs Vox


Sam-Bankman’s Free Digital Assets Exchange, FTX Fall, has industry-wide improvements, one of which is market makers increasing their share of crypto options trading volumes.

As of Friday, the notional value of the month-to-day interdealer flow on the institutional-level (OTC) communication platform Paradigm was 633 million dollars, or 43.5% of the total trading volume of crypto options $1,455 million dollars. . This is the highest since at least January this year.

“More territorial providers (country funds/family offices/HNW) are sitting on the sidelines, and higher Paradigm volumes are happening among market makers,” Paradigm said on Twitter. Melting of FTX.

Options trading is an interdealer trade where both the price payer and the price maker are market makers, which means they are responsible for maintaining a healthy exchange rate.

Bidders create orders and wait for them to be filled. In other words, they bring the market to the market. Receivers remove liquidity from the market by accepting available orders.

The crypto market, like traditional finance, consists of a “buy side” and a “sell side”. The buy side invests in real estate and includes pension funds, mutual funds, institutional investors, hedge funds and retail investors. The sell side, which includes commercial banks, investment banks, market makers, stockbrokers and other entities, is concerned with the origination, promotion and issuance of commercial securities.

While Paradigm is an OTC communications platform, the asset is closely tied to Deribit, the world’s leading centralized cryptocurrency options trading volume and open positions exchange. Paradigm-facilitated trades are processed, isolated and cleared directly by Deribit.

Trades or trades between market makers usually account for a larger share of total trading volume.

Trades or trades between market makers usually account for a larger share of total trading volume.

The percentage of total volume as interdealer flow jumped to 43.5% in December from 30.4% in November.

“This could be buying customers closing the books for the year and it’s still only mid-month, but this sharp jump signals a structural change,” said Amberdata’s weekly options analysis note published on Sunday.

One possible structural change could be the fall of FTX due to the high level of uncertainty that entered the market and the reluctance among retail and investors to hold coins/funds on centralized exchanges.

FTX filed for bankruptcy on November 11, prompting a chain reaction that has taken on industry heavyweights such as crypto lender BlockFi and brought further scrutiny to leading exchange Binance and some veteran digital asset institutions such as Grayscale. Greyscale is a digital currency group, which is the parent of CoinDesk.

“The bottom line is that the supply-demand picture between the number of market makers and the number of active seekers is definitely more supply from makers and less demand from buyers at Paradigm,” he said in a YouTube interview earlier this month.

According to Cruy, the situation is likely to continue. “In light of recent events, people are sitting on their hands and waiting to see what happens. There are still a lot of elements that haven’t been raised yet,” Kruy said.


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