The Rapid Growth of Bitcoin Options Trading
“In traditional finance, futures and options trading volumes often surpass spot trading. From a macroeconomic perspective, this growth trajectory is perfectly normal,” explains Daniel Yan, Chief Operating Officer of bit.com.
Over the past year, Bitcoin options trading has experienced explosive growth. While Deribit—a European cryptocurrency options exchange founded in 2015—once dominated over 90% of the market, major spot exchanges like Binance, OKEx, and Huobi entered the fray starting in 2020. This shift underscores the growing importance of options trading in the crypto ecosystem.
Since its August 2021 launch, bit.com has rapidly ascended to become the world’s second-largest options exchange. In this exclusive interview, Daniel Yan shares insights about:
– The evolution of crypto options markets
– bit.com’s unique positioning
– Practical strategies for understanding options
👉 Discover advanced trading strategies with Bitcoin options
bit.com: A High-Potential Spin-off from Bitmain
Daniel Yan joined Bitcoin mining giant Bitmain in early 2018, leveraging his 8-year experience in forex derivatives at Bank of America Merrill Lynch to build Bitmain’s cryptocurrency trading division from scratch.
Due to overwhelming demand, Yan and his team spun off to create Matrixport—a comprehensive digital asset financial services platform. Backed by Bitmain co-founders Jihan Wu (Chairman) and Yuesheng Ge (CEO), Matrixport launched bit.com in August 2021 as its derivatives trading arm.
Key milestones for bit.com:
- Launched BTC, ETH, and BCH perpetual contracts, futures, and options within 7 months
- Pioneered BCH options trading
- Achieved global reach with 50% Asian and 50% Western (North American/European) users
- Processed $12B cumulative trading volume ($100M daily average)
“Options remain in their early-stage growth phase within crypto,” notes Yan. “Just like in traditional markets where derivatives dwarf spot volumes, this expansion is both natural and inevitable.”
Why Options Trading is Gaining Momentum
Three key drivers fuel options market growth:
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Structured Products Adoption: Matrixport’s dual-currency investment products (powered by options) gained early traction among miners seeking sophisticated hedging tools.
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Institutional Participation: Traditional funds and professional traders bring liquidity and mature strategies to crypto options markets.
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Cost Efficiency: Compared to futures, options often provide cheaper downside protection when used strategically.
👉 Learn institutional-grade risk management techniques
Options Trading: Opportunities vs. Risks
Strategic Advantages
- Long options: Limited risk (premium paid) with unlimited upside potential
- Covered calls: Generate yield on existing holdings while maintaining upside exposure
- Tail risk hedging: Protect portfolios against extreme market movements
Common Pitfalls
- Naked short calls: Selling uncovered call options risks catastrophic losses during price surges
- Liquidity constraints: Some exotic options suffer from wide bid-ask spreads
- Complexity: Requires deeper market understanding than spot trading
Beginner’s Guide to Crypto Options
For newcomers, Daniel Yan recommends:
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Educational Resources: bit.com’s comprehensive FAQ section explains options mechanics.
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Structured Products: Matrixport’s dual-currency investments simplify options exposure:
- Fixed interest payments
- Automatic currency conversion at maturity
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Ideal for miners and long-term holders
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Practical Applications:
| User Profile | Optimal Strategy | Benefit |
|---|---|---|
| Bitcoin bull | USD-denominated dual investment | Earn interest or buy BTC at discount |
| Miner | BTC-denominated dual investment | Hedge while covering operational costs |
| Volatility trader | Long strangles/straddles | Profit from price swings |
Frequently Asked Questions
What makes bit.com different from other options exchanges?
bit.com focuses on user education and intuitive strategy-building tools, lowering the entry barrier for retail traders while serving institutional needs.
How risky are Bitcoin options compared to spot trading?
Options carry different (not necessarily higher) risks. Properly structured positions can actually reduce portfolio risk through defined-loss strategies.
Can beginners profit with options?
Yes, through covered calls or cash-secured puts—but avoid selling naked options until mastering risk management.
Why trade options instead of futures?
Options provide asymmetric payoff structures, allowing traders to define maximum loss while maintaining unlimited profit potential in certain strategies.
What’s next for crypto options markets?
Expect more exotic options (barrier, Asian, etc.) and cross-margining solutions as liquidity improves and traders demand sophisticated instruments.
How does regulation impact options trading?
While evolving, most jurisdictions treat crypto options similarly to other derivatives—requiring proper risk disclosures but not prohibiting retail access.
Cryptocurrency investments involve substantial risk. Prices can fluctuate widely, potentially resulting in total capital loss. Always conduct thorough research before trading.
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