An Institution Bets $25 Million on Derive's Bitcoin Options Market as U.S. Election Approaches

On Oct. 24, an institution made a $25 million hedge trade on Derive's on-chain bitcoin options market, betting that bitcoin will continue to rise after the Nov. 5 U.S. election, CoinDesk reported. The trade, which involved a long options strategy targeting a rise in the price of bitcoin to $80,000 by Nov. 29, is the largest on-chain options trade related to the U.S. election to date.

The institution purchased 100 calls with a strike price of $70,000, while selling 200 $80,000 calls and 100 $50,000 puts, all of which will expire on Nov. 29th. As collateral, they used eBTC, a repledged bitcoin generated through EtherFi, to ensure that passive income was still available during the position.

Derive co-founder Nick Forster said the transaction demonstrates the flexibility and scalability of on-chain options trading, and that if the bitcoin price reaches $80,000 on Nov. 29, the strategy could potentially profit $1.02 million. The deal highlights the growth potential of the on-chain options market and reflects market expectations for a rise in the price of bitcoin after the U.S. election.Derive currently accounts for 32 percent of total options trading on decentralized exchanges, but the on-chain options market is still relatively small compared to centralized platforms such as Deribit.