Top industry traders — including the founders of Deribit, Three Arrows Capital, XBTO, and QCP Capital — share deep insights into crypto derivatives and why Deribit has become the dominant force in bitcoin options trading.
If 2019 was the breakout year for crypto derivatives, then 2020 marked the rise of crypto options. With options trading volume surpassing 5,000 BTC and reaching all-time highs, Deribit has established itself as the undisputed leader in the options market — at one point commanding 90% of all bitcoin options trading volume.
In a special panel discussion, host Yama sat down with Deribit’s founder and three of the crypto industry’s most respected traders to discuss the state of crypto derivatives, the future of bitcoin options, and why professional investors consistently choose Deribit.
Key Takeaways
- Three Arrows Capital co-founder: The bitcoin options market is still small and has the potential to grow 10x
- Deribit founder: The crypto market is far smaller than traditional finance, which explains the scarcity of structured products
- XBTO CEO: Deribit’s competitive advantage in options lies in its liquidity — something extremely difficult for competitors to replicate
- QCP Capital founder: Crypto options OTC trading is primarily conducted between sophisticated institutional players
Panel Guests
- John Jansen — Founder & CEO of Deribit
- Philippe Bekhazi — CEO of XBTO
- Kyle Davies — Co-founder of Three Arrows Capital
- Darius Sit — Founder & CIO of QCP Capital
How These Traders Discovered Bitcoin
John Jansen (Deribit): I first heard about Bitcoin around the winter of 2013. A lawyer friend in Amsterdam told me about some of his clients using Bitcoin for questionable activities. When I asked him what Bitcoin was, he said it was some kind of digital internet currency with no central authority. I thought that sounded impossible — so I went home and started researching. Within minutes, I realized this was something truly special. I was hooked. Over the following months, the idea of launching an exchange for options and futures trading on Bitcoin took shape.
Philippe Bekhazi (XBTO): My journey started in 2010 when a friend emailed me the Bitcoin whitepaper. I found it fascinating but was busy with other things. Six months later, a completely different person brought up Bitcoin again, telling me it was perfect for what I do. Those two moments set me on this path. I started mining with CPUs, engaged with the Bitcoin community, and in 2015 founded XBTO as a global liquidity provider. We primarily trade with our own capital and have since expanded into equity investments, mining, advisory services, and asset management.
Kyle Davies (Three Arrows Capital): Three Arrows was founded eight years ago as a hedge fund. My background was in derivatives trading — equity derivatives including accumulators, knock-in/knock-out options, and exotic options in Asia. We started with forex trading and achieved strong early performance. Crypto was initially the lowest-priority asset in our portfolio, mainly used for lending and basis trading on a few derivatives exchanges. In 2017-2018, when I saw some of my earliest hires making tremendous money in crypto, I decided to pivot the entire company toward crypto. That turned out to be the right call.
Darius Sit (QCP Capital): My financial background is very similar to Kyle’s, particularly in FX and NDF (Non-Deliverable Forward) derivatives. I specialized in arbitrage trading across Asian financial markets, where capital controls create pricing inefficiencies. That’s exactly how I discovered Bitcoin — I heard about an asset being arbitraged across China, Korea, Malaysia, and India. I started doing crypto arbitrage in Asia, which led to the founding of QCP Capital.
The Bitcoin Options Market: Room to Grow 10x
Kyle Davies offered a striking perspective on market size: just days before the discussion, Bitcoin options trading hit an all-time high of over 5,000 BTC (roughly $500 million). Despite this milestone, a major trading firm tweeted that “options prospects look good, but liquidity is terrible.”
Davies found this reaction revealing: “This was the single highest daily options volume ever, and they’re calling it terrible? The market isn’t big enough yet, but liquidity is genuinely improving. There’s potential for it to grow 10x, and even then it would represent only about 1% of the overall derivatives market. In equities and FX, derivatives can reach 60-70% of the total market size. Bitcoin options could grow 10x and still need another 5x just to be considered significant.”
Darius Sit compared the crypto options landscape to traditional FX markets: “In forex, almost 100% of options trading is OTC with virtually no order book trading. Crypto options present a hybrid model — you see significant centralized order book trading alongside customized OTC deals. I estimate the split is roughly 50-50, though it could shift to 75-25 in favor of auditable on-exchange liquidity. Both segments will continue to grow.”
Why Professional Traders Choose Deribit
When asked why they consistently trade on Deribit despite growing competition from exchanges like OKEx and Binance, the panelists were unequivocal in their reasoning.
Liquidity Is King
Kyle Davies: “In options trading, liquidity is king — but so is collateral management. When new options exchanges appear, they tend to attract users who have no alternative, like Americans who must use CME. But ultimately, everyone needs to hedge, and a single collateral pool is far more capital-efficient. Deribit launched in 2014, went live in 2016, and despite countless competitors, has maintained its position because of one core philosophy: the trader is king. Everything is designed to make trading easier, win trust, and build support. That produces liquidity.”
Infrastructure Excellence
Philippe Bekhazi: “When we started trading crypto derivatives around summer 2016, liquidity was essentially zero. But we believed in the 10-year macro trend. What Deribit needed to do — and did do — was build the right infrastructure: a system capable of handling massive order flow, processing expirations and exercises, managing market makers’ constant price adjustments, and serving investors who need real-time quotes. Deribit got this right from day one. Their updates may not come as fast as some would like, but the quality is far superior. They haven’t crashed.”
“Because they were first and executed well, they attracted critical mass liquidity — and that creates a network effect that’s extremely hard to break. Many competitors lack derivatives DNA. They came from spot exchanges, entered the space two years late, and tried to copy what Deribit built. But you can’t simply replicate a liquidity moat.”
The Moat Is Real
Darius Sit: “When you actually trade and compare order books across CME, OKEx, or other exchanges, the flow all comes back to Deribit. It has become the center of gravity for options liquidity. If you want to execute large trades with minimal slippage, there’s simply no other venue. That’s a very wide moat. As long as you’re actively trading, you’ll primarily stay on Deribit.”
Bitcoin Collateral vs. Stablecoin Collateral
An interesting side discussion emerged about the trend toward stablecoin-denominated derivatives versus Bitcoin-denominated products.
Kyle Davies noted that many Delta One derivatives exchanges have seen Bitcoin-margined products lose market share to Tether-margined alternatives. He pressed the panel for their views on whether this was a lasting trend.
Philippe Bekhazi argued that most people still evaluate their P&L in fiat terms: “People prefer Tether, USDC, or other dollar-pegged stablecoins. To truly forget about the dollar and measure everything in Bitcoin — your coffee, your piano — almost nobody does that. You’d have to be an extremely hardcore Bitcoin maximalist.”
Kyle Davies pushed back: “I don’t measure my coffee in Bitcoin, but I absolutely measure my trading book’s P&L in Bitcoin terms. When I say we’re profitable, I mean our Bitcoin-denominated assets have increased. I still can’t wrap my head around a future where crypto collateral becomes primarily Tether-based.”
The Future of Structured Products and OTC Trading
The panel discussed why sophisticated structured products haven’t yet emerged at scale in crypto.
John Jansen offered a frank assessment: “When I started this company in 2014, I imagined there would be more structured products and more competitors by now than there actually are. The crypto market is simply much smaller than traditional finance, and that’s the main reason structured products remain scarce.”
Darius Sit identified private banking as the next major client segment: “In a world of negative interest rates, private banks are telling clients about 2% yields and getting zero interest. But crypto options can offer 10% implied yield products. We’ve spoken with several private banking institutions that see this as the next scalable, high-yield, moderate-risk product category. Private bank clients are increasingly educated about crypto and warming up to these product concepts.”
Philippe Bekhazi highlighted the infrastructure challenges of bilateral OTC trading: “When you discuss bilateral trades, you immediately encounter product fragmentation and liquidity fragmentation. Each product essentially has one buyer and one seller. Negotiating prices is time-consuming, requires enormous operational overhead, complex legal frameworks, and mutual trust between counterparties.”
He pointed to their investment in X Margin as a potential solution — a company using zero-knowledge proofs to solve real-time margin calculations across exchanges without revealing position details, enabling higher capital efficiency for bilateral trading.
Favorite Trading Strategies from the Pros
When asked about their all-time favorite trading strategies, the panelists revealed their distinct approaches:
John Jansen: “I tend to be a short-term options trader, though I don’t recommend this strategy — it’s purely personal preference. I like selling wings to collect premium, which means occasionally getting unpleasant surprises.”
Philippe Bekhazi: “I don’t have a favorite strategy. Whatever makes money is the strategy I like.”
Darius Sit: “For both retail and professional investors, selling cash-covered puts without leverage has consistently been a strong strategy. If you’re bullish on the space, your risk is relatively low since you’re not leveraged. If price moves sharply, you collect premium — essentially free Bitcoin options. It’s an excellent way to accumulate tokens.”
Kyle Davies: “Our favorite strategy has been futures basis trading — trading perpetual swaps or futures against spot, and using that as collateral for borrowing. We’ve been running this strategy since 2013 across various financial products. Every year people say it will become obsolete as more capital enters the market, but I believe as long as Bitcoin continues to appreciate and demand for this strategy grows, it will remain viable.”
Final Thoughts
The consensus among these industry veterans is clear: Deribit has built a formidable position in the crypto options market through superior infrastructure, deep liquidity, and a trader-first philosophy. While the bitcoin options market remains small compared to traditional finance, the growth potential is enormous — with room to expand 10x or more. For professional traders seeking the deepest liquidity, most efficient collateral management, and proven reliability, Deribit remains the platform of choice.
As institutional adoption accelerates and new client segments like private banking enter the space, the crypto options market stands at an inflection point. The coming years could see the structured products and sophisticated trading strategies that have long defined traditional finance finally take root in the crypto derivatives ecosystem.
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