Bybit's Crypto Derivatives Report Highlights Year-End Trends
Bybit, the world's second-largest cryptocurrency exchange by trading volume, has released its latest cryptocurrency derivatives analysis report in collaboration with Block Scholes. The report provides insights into market behavior and open position trends for key year-end options expirations for Bitcoin (BTC) and Ethereum (ETH).
The report revealed that open positions in BTC and ETH perpetual swaps have remained stable despite not returning to the peaks seen in early December 2024. This stability indicates that traders are not heavily utilizing perpetual contracts to hedge the delta of expiring options, contributing to a low volatility environment during this period.
Trading volumes decreased during the winter holiday season, coinciding with a drop in realized volatility that reached December's lows. Despite the expiration of December options, there was no expected increase in volatility. Instead, realized volatility has fallen to the lower end of its recent range.
Implied volatility for BTC options continues to exhibit a steep term structure; long-term implied volatility hovers around 57%, while 1-week at-the-money options trade about five points lower. The majority of expiring open positions were not rolled over, maintaining a neutral balance among trading options.
Consequently, the BTC options market shows limited leverage compared to its position at the beginning of December 2024, indicating cautious sentiment.
Despite a significant expiration of ETH options at the end of December 2024, market dynamics remained stable. The spike in realized volatility experienced in December did not carry into the new year, and ETH's spot price is currently exhibiting lower volatility compared to short-term implied volatility.
Last week, the term structure of implied volatility for ETH options changed; after briefly steepening, it flattened again, diverging from BTC's consistently steep profile. This pattern suggests that the ETH options market is preparing for potential short-term volatility in spot price movements.
Interestingly, at the beginning of 2025, call options for ETH gained momentum, dominating the market, and signaling an optimistic outlook among traders.