The fast-evolving crypto market will witness another milestone as Deribit, the world’s leading crypto options exchange, prepares to launch options contracts for XRP, Solana (SOL) and Polygon (MATIC). Given Deribit’s dominant position in the options space, this inclusion could have notable implications for XRP’s price dynamics.
Deribit debuts XRP options
Deribit, which has established itself as the leading crypto options exchange both in terms of trading volume and open interest, is not letting the recent dip in digital asset volatility deter its expansion efforts. If reported According to Bloomberg, the exchange is ready to roll out options contracts for the XRP token in January.
This move, announced by Chief Commercial Officer Luuk Strijers, will expand the platform’s offering, which until now has mainly focused on Bitcoin, Ether and USD Coin options. The choice can be influenced by financial interests and prevailing market conditions. Crypto derivatives trading volumes fell to around $1.5 trillion in September, compared to around $2 trillion earlier this year, driven by lower prices and volatility from 2021 highs.
To further strengthen its strategic vision, Deribit is not just limiting itself to expanding options. The Panama-based giant has announced plans to transfer its operations to Dubai, a more crypto-receptive jurisdiction, after obtaining the necessary licenses. In parallel, the company plans to expand its workforce by about a dozen, adding to its current base of 115.
Strijers expressed the inherent challenges in timing the launch of new products given current market sentiment. “Is this the best environment to launch new products or should we postpone this?” he pondered, but remained optimistic about possible increases in volatility after the January launch.
Impact on price
With an overwhelming 85% market share in options trading, Deribit’s influence is undeniable. The rest of the market is shared by competitors such as OKX, Binance and Bybit. A significant 85% of the volume flowing through Deribit comes from institutional clients. Therefore, the addition of XRP options on such a dominant platform will inevitably draw significant attention to the price dynamics of XRP.
By design, options offer traders the privilege (without obligation) to buy or sell the underlying asset at a preset price until a certain date. This can have multifaceted consequences for the underlying asset. XRP, as it becomes intertwined with the options mechanism, may witness higher volatility in pricing in the short term, especially around the expiration of these contracts.
“The quarterly expirations are usually the most important, in terms of volume and value,” Strijers emphasized in a recent discourse. Drawing parallels to Bitcoin, it is likely that XRP could experience increased volatility as these options contracts approach their expiration dates, especially at the end of the quarter, depending on the volume of XRP options being traded.
In short, with Deribit’s untouchable status in the options space and the inherent nature of options contracts, the introduction of XRP options could very well become a pivotal point in XRP’s price trajectory. Traders, especially those involved in XRP, will need to brace themselves for the nuanced challenges and opportunities this integration brings.
At the time of writing, XRP was trading at $0.4994, after a brief decline to $0.4880.
Featured image from Shutterstock, chart from TradingView.com
