Crypto Traders Load Up on Bitcoin Topside Option Plays After Binance's Guilty Plea

Binance chief Changpeng "CZ" Zhao on Tuesday stepped down and pleaded guilty to violating U.S. anti-money laundering laws as part of a $4.3 billion settlement, in what may come across as the most significant blow to the crypto market since the collapse of Sam Bankman-Fried's exchange FTX last year.

But that's certainly different from how traders look at the events.

According to over-the-counter institutional cryptocurrency trading network Paradigm, the options market has increased activity in topside bitcoin call options in the aftermath of the Binance news, a sign of persistent bullish sentiment.

"In the options space, after the initial two-way flow, we have seen interest in loading up more topside with strong demand for the March 2024 expiry [calls]," Patrick Chu, head of institutional sales coverage at Paradigm, told CoinDesk.

Data shared by market analyst Chang shows that early Wednesday, market participants traded 550 contracts of BTC $45,000 strike call option expiring in March 2024 on Deribit. Buyers, expecting a continued price rally in bitcoin in the coming months, paid a cumulative premium of $1.5 million for the bullish bets. On Deribit, one options contract represents one BTC.

A call option is a contract between a buyer and a seller to purchase the underlying asset at a preset price on or before a specific date. A call buyer is implicitly bullish on the market, while a put buyer is bearish.

Overall, both short-term and long-term calls continue to trade at a premium relative to puts, as evidenced by the positive call-put skews. It's a sign the market doesn't expect a significant fallout from Binance's guilty plea.

The sentiment is that U.S. regulators have cleaned up the industry, setting the stage for approving the first U.S.-based exchange-traded fund that invests in cryptocurrency. The so-called spot-based ETF is expected to bring billions in investor money to the crypto market.

Bitcoin is currently trading above $36,500, according to CoinDesk Indices data, down 2% on-day.