Bitcoin and XRP Institutional Investor Strategies

Recent price fluctuations in the cryptocurrency market continue to attract the attention of investors. In particular, leading digital assets such as Bitcoin (BTC) and XRP are seeing institutional investors opting for different strategies to position themselves.

Major investors appear to be moving with directionless strategies on the Bitcoin side, expecting volatility, while for XRP, they prefer to operate within a narrower range. Fundamentally, it seems that most Bitcoin investors are expecting high volatility. Last week, substantial block option data that occurred on Deribit revealed that Bitcoin investors predominantly turned to directionless but high-volatility expectation strategies, such as strangle and straddle.

However, the situation is quite different on the XRP front. During the same period, it was observed that large investors opened short strangles, indicating a belief that volatility would decrease. These two contrasting approaches demonstrate that different expectations are prevailing in the market. According to Deribit data, 16.9% of the Bitcoin option block trades consist of strangle, and 5% consist of straddle strategies. Both strategies focus on the potential for gains based on a sharp movement rather than 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 indecisiveness. The open position size in the Bitcoin options market has surpassed $44 billion, and this space is increasingly attracting larger institutional players. On the Ethereum (ETH) front, the put diagonal spread strategy has stood out throughout the week, providing investors with partial exposure to volatility.

On the other hand, the XRP options market is relatively smaller, with only $67.6 million in trading volume. However, large block trades conducted here are noteworthy. Recently, it was reported that 40,000 call options at $2.20 and 40,000 put options at $2.60 were sold through the Paradigm OTC desk, indicating a large short strangle position had been opened. Lin Chen, Head of Deribit Asia BD, stated that these transactions contain a strong expectation that XRP will remain “within the $2.20–$2.60 range.”

In conclusion, although XRP’s ATM volatility has risen above 80%, it is observed that some investors believe that macro risks are now fully reflected in prices and thus have positioned themselves for a decline in volatility. However, it is wise to be careful with the short strangle strategy to avoid unlimited losses during volatility spikes. Investors need to closely monitor developments in the market and these strategies for both digital assets.