Bitcoin and XRP Institutional Investor Strategies

The recent price fluctuations in the cryptocurrency market continue to attract the attention of investors. Especially in leading digital assets like Bitcoin (BTC) and XRP, institutional investors prefer to take positions with different strategies.

Large investors are moving with neutral strategies on the Bitcoin side while expecting volatility, whereas they prefer to move in a narrower range for XRP. In a general sense, it is seen that the majority of Bitcoin investors expect high volatility. Last week, the large block options data on Deribit revealed that Bitcoin investors predominantly turned to neutral yet high volatility expectation strategies such as strangle and straddle.

However, the situation on the XRP front is quite different. During the same period, it was observed that large investors opened short strangles, indicating positions that volatility would decrease. These two contrasting approaches show that different expectations prevail in the market. According to Deribit data, 16.9% of Bitcoin options block trades are composed of strangle, and 5% of straddle strategies. Both strategies have the potential for profit based on the expectation of a sharp movement, rather than focusing on which direction the price will break.

Deribit CEO Luuk Strijers evaluated this dataset as an extraordinary ratio indicating that the market is struggling with indecision. The open position size in the Bitcoin options market has exceeded $44 billion, and this sector is increasingly attracting larger institutional players. On the Ethereum (ETH) front, the put diagonal spread strategy stood out throughout the week, indicating that investors provided partial exposure to volatility.

On the other hand, the XRP options market is relatively smaller, with only a trading volume of $67.6 million. However, the large block trades conducted here are notable. Recently, it was reported that 40,000 call options at $2.2 and 40,000 put options at $2.6 were sold through the Paradigm OTC desk, indicating that a large short strangle position was opened. Lin Chen, the head of Deribit Asia BD, stated that these transactions implied a strong expectation that XRP would remain “stuck in the range of $2.2–2.6.”

In conclusion, despite the XRP ATM volatility having exceeded 80%, some investors are seen to have taken positions expecting a decrease in volatility, believing that macro risks are no longer fully reflected in prices. However, it is advisable to be cautious with the short strangle strategy, as it can lead to unlimited losses during volatility spikes. It is important for investors to closely monitor the developments in the market and these strategies for both digital assets.