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Crypto Potato 2025-02-02 14:54:04

The State of Crypto Options Markets After the Recent Sell-Off (Report)

The beginning of this week was a bit cranky for the financial market, with sharp declines across major stock indexes and digital assets amid the launch of DeepSeek’s artificial intelligence (AI) model. Despite the volatility that came with the sell-off, open interest in perpetual swaps for Bitcoin and other leading cryptocurrencies remained stable, while funding rates momentarily became negative before recovering. The options market also recorded an uptick in trading activity during the sell-off. Ethereum Options More Bullish Than Bitcoin However, according to a report by the crypto exchange Bybit and the institutional-grade research firm Block Scholes, the aftermath of the risk-off event sees Ethereum options looking more bullish than Bitcoin options. Ethereum options have maintained a volatility premium over their Bitcoin counterparts. Over the past month, trading volume for Ethereum options has been at strong levels. The derivatives saw similar activity levels between late December 2024 and early January 2025. However, the latest data shows more call activity. Open interest data has also tilted majorly toward call options. The spot sell-off earlier this week caused investors to briefly refrain from placing call options; however, Ethereum options have continued to trade at higher volatility levels relative to Bitcoin. Notably, the same cannot be said for ether’s (ETH) spot price, which has been lagging behind bitcoin’s (BTC). Bitcoin Options Volatility Declines Even Solana options are seeing solid open interest in puts and calls, with trading activity exceeding levels seen during a price rally driven by the launch of two presidential memecoins on the network. Bybit and Block Scholes said stable levels of newly opened put options on the Solana network suggest investors are strategically buying to hedge profitable long positions in other financial instruments. As for Bitcoin, current data shows little change in the options market over the past week, except for the expiration and reopening of short-dated trades. “Short-tenor options are trading with lower volatility and a neutral skew, while longer-dated volatility smiles are trading with increased volatility expectations and a persistently bullish skew toward OTM calls — as they have for much of the post-election period,” the report explained. Meanwhile, the Bitcoin options market recorded the highest single-day trading volume for calls this month, reaching $250 million during the spot price decline. However, volatility has continued to decline in both realized and implied terms since then. The post The State of Crypto Options Markets After the Recent Sell-Off (Report) appeared first on CryptoPotato .

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