A recent crypto derivatives analytics report from Bybit in collaboration with Block Scholes reveals key trends in Bitcoin (BTC) and Ethereum (ETH) options markets as major year-end expirations approached. Here are the critical insights:
Year-End Options Expiration Maintains Stable Open Interest
Despite perpetual contract open interest not fully recovering from early December 2024 highs, BTC and ETH markets demonstrated resilience during the crucial year-end options expiration period. This suggests traders didn't excessively use perpetual contracts to hedge delta risks, contributing to relatively low volatility during this phase.
Key observations:
- Trading volume declined during winter holidays
- Realized volatility dropped to December's lowest levels
- Market conditions reflected cautious positioning rather than aggressive speculation
BTC Options Curve Remains Steep Despite Parity Conditions
Contrary to expectations, December's options expiration didn't trigger volatility spikes. Instead:
- Realized volatility settled near recent range lows
Implied volatility term structure maintained steepness
- Longer-dated implied volatility hovered around 57%
- 1-week at-the-money options traded ~5 percentage points lower
- Expired open interest saw limited reinvestment
- Put-call ratios indicated neutral positioning
This pattern suggests:
- Limited leverage effects in BTC options markets
- Measured market sentiment entering the new year
- Balanced risk appetite among institutional participants
ETH Options Expiration Passes Without Major Disruption
Despite substantial ETH options expiring in late December 2024:
- Market dynamics remained orderly
- December's realized volatility spike didn't extend into January
- Current ETH spot volatility sits below short-term implied levels
Notable developments:
- ETH options' implied volatility term structure briefly steepened before flattening
- Divergence from BTC's persistently steep curve emerged
- Pattern suggests preparation for potential short-term spot price movements
Interesting trends:
- Strong early 2025 call option momentum dominating ETH markets
- Bullish sentiment persists despite expiration events
- Traders positioning for potential upside while managing near-term risks
Strategic Implications for Crypto Traders
👉 Master advanced options strategies with Bybit's professional tools
The report's findings suggest:
BTC Markets exhibit:
- Mature hedging behavior
- Sophisticated volatility management
- Institutional-grade risk controls
ETH Markets demonstrate:
- Heightened sensitivity to spot movements
- Faster sentiment shifts
- Greater retail participation influence
Frequently Asked Questions
Why did BTC volatility remain low during expiration?
The stability resulted from balanced positioning, with traders avoiding excessive hedging through perpetual contracts and maintaining neutral exposure through expiration.
What does ETH's call option momentum indicate?
The strong call buying suggests traders anticipate potential upside while current implied volatility levels may present attractive entry points for long volatility strategies.
How should traders adjust strategies based on these findings?
Consider:
- Differentiating BTC and ETH volatility approaches
- Monitoring term structure divergences
- Implementing calendar spreads to capitalize on steepness variations
👉 Explore real-time options analytics on Bybit's advanced platform
The complete Bybit x Block Scholes Crypto Derivatives Analytics Report provides additional depth for institutional and sophisticated traders seeking to optimize their volatility trading frameworks.