The move comes as Bitcoin and Ethereum are experiencing record low volatility, making these new derivatives potentially more effective as hedges

Crypto currency options exchange Deribit is set to offer altcoin options contracts for Solana (SOL), Ripple (XRP), and Polygon (MATIC) in January, amidst a significant crypto market downtrend. The move comes as Bitcoin (BTC) and Ethereum (ETH) are experiencing record low volatility, making these new derivatives potentially more effective as hedges. The decision to delay the launch until January is ascribed to the ongoing low volatility in the market.

Luuk Strijers, the Chief Commercial Officer of Deribit, expects that the new altcoin options contracts will enhance market volatility. Richard Galvin of Digital Asset Capital Management underscored Ethereum’s diminishing popularity because of its low volatility, while pointing out that altcoins like SOL, XRP, and MATIC are susceptible to price variations from smaller trades because of their lower liquidity. However, it is still uncertain whether Deribit will apply measures to counteract potential market manipulation risks related to its options contracts.

In preparation for the launch of these options contracts, the crypto options exchange is planning a transition from Panama to Dubai. This decision follows significant losses incurred because of Three Arrows Capital’s (3AC) failure to meet margin requirements.

In the meantime, ETH futures exchange-traded funds have struggled to draw institutional investors. Vetle Lund of K33 Research reported that ETH futures represented a mere 0.2% of Bitcoin futures exchange-traded funds volumes in 2021.

On Monday, geopolitical tensions, especially the Middle-East conflict, put downward pressure on crypto prices. Bitcoin has dropped more than 1% to the mid-$27,000s, while Ether has declined more than 3% to $1,580 after the Ethereum Foundation’s $2.7 million ETH sale on Uniswap. There are concerns about ETH potentially dropping below the $1,550 support level and BTC breaking the $28,000 threshold amid its uptrend.