Bitcoin June 2024 Expiry Futures and Options in High Demand Due to Halving: Deribit

Bitcoin's (BTC) fourth mining reward halving, a programmed code that reduces the pace of supply expansion by 50% every four years, is due in April next year.

Preparations for the same have already begun, with investors seeking bitcoin futures and options that expire two months after the pivotal event known to significantly impact the cryptocurrency's price, according to Deribit, the world's largest crypto options exchange by trading volume and open interest.

The Panama-based exchange has decided to list the June 2024 expiry futures and options on Thursday at 08:00 UTC, preponing the launch by a week to cater to the user demand.

"Normally, Deribit would introduce the June 2024 options and futures next week at the June 2023 quarterly expiry. However, with the halving expected in April, clients have requested us to list them earlier to facilitate the trading of these contracts ahead of the regular listing date," Deribit's Chief Commercial Officer Luuk Strijers told CoinDesk.

"For derivatives desks & dealers having the ability to trade on exchange is important as it reduces their overall capital requirements and allows them to hedge their exposure relating to bilateral/OTC positions," Strijers added.

Futures are financial derivative contracts that obligate parties to buy or sell an asset at a predetermined future date and price. Options are derivative contracts that give the purchaser the right but not the obligation to purchase the underlying asset at a predetermined price on or before a specific date. A call option gives the right to buy, while the put confers the right to sell.

Futures work as a hedge against future market volatility. Options are mainly used to hedge or reduce the portfolio's risk exposure. Sophisticated traders often buy options or futures to take a leveraged bullish or bearish bet on the underlying asset at a lower cost.

Bitcoin's impending halving will reduce the per-block reward paid to miners to 3.125 BTC from 6.25 BTC. Historically, bitcoin has rallied in the months leading up to the supply-altering event and seen price pullbacks following the event.

If history is a guide, there could be plenty of directional volatility in the next 12 months – more so as the U.S. Securities and Exchange Commission is expected to decide on BlackRock's spot-based BTC ETF application early next year.