Corporate Investor Strategies in Bitcoin and XRP

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 acting with directional strategies on the Bitcoin side while expecting volatility, whereas in the case of XRP, they prefer to operate within a narrower range. In a fundamental sense, it is observed that the majority of Bitcoin investors expect high volatility. Last week, large block options data on Deribit revealed that Bitcoin investors predominantly leaned towards directionless but high volatility expectations 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 strangle positions, indicating an expectation 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 transactions consist of strangle, and 5% consist of straddle strategies. Both strategies focus on the potential for earnings 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 uncertainty. The open position size in the Bitcoin options market has surpassed $44 billion, and this area is increasingly attracting larger institutional players. On the Ethereum (ETH) front, the put diagonal spread strategy stood out throughout the week, indicating that investors gained partial exposure to volatility.

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

In conclusion, although the ATM volatility of XRP has risen above 80%, it is observed that some investors believe the macro risks have already been fully reflected in the prices and are taking positions based on the expectation of a volatility decline. However, it is important to be cautious, as the short strangle strategy can lead to unlimited losses during volatility spikes. Investors should carefully monitor developments in the market and these strategies for both digital assets.