Bybit's Crypto Derivatives Insights on BTC and ETH
Overview of Bybit's Crypto Derivatives Report
Bybit, the world's second-largest cryptocurrency exchange by trading volume, has released a crypto derivatives analytics report in collaboration with Block Scholes. This report provides a comprehensive analysis of market behavior and open interest trends during the significant year-end options expiration for Bitcoin (BTC) and Ethereum (ETH).
Stability in Open Interest
The report highlights that open interest in BTC and ETH perpetual swaps remained stable during the critical year-end options expiration. This steadiness suggests that traders did not heavily rely on perpetual contracts to hedge the delta of expiring options, contributing to the subdued volatility observed during this period.
Trading Volumes and Volatility
Trading volumes experienced a downturn during the winter holiday season, which coincided with a drop in realized volatility, reaching its lowest levels in December. Despite the December options expiration, there was no surge in volatility as anticipated. Realized volatility instead fell to the lower end of its recent range.
Implied Volatility Term Structure
The implied volatility term structure for BTC options remains steep, with longer-dated implied volatility around 57% and 1-week at-the-money options trading about five points lower. The expired open interest has not been significantly reinvested, maintaining a neutral call-put balance. This positions BTC's options market with limited leverage compared to early December 2024, indicating cautious sentiment.
Ethereum Market Dynamics
Despite the expiration of ETH options in late December 2024, market dynamics remained stable. A spike in realized volatility in December did not persist into the new year, with ETH's spot price currently experiencing lower volatility compared to short-tenor implied volatility.
ETH Options Market Outlook
The implied volatility term structure for ETH options has shown variability, briefly steepening before flattening again, diverging from BTC's consistently steep profile. This pattern suggests that ETH's options market may be anticipating potential short-term volatility in spot price movements. Interestingly, call options for ETH have gained momentum at the start of 2025, signaling an optimistic outlook among traders.
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