In their recent collaborative crypto derivatives analytics report, Bybit, the world’s second-largest cryptocurrency exchange by trading volume, along with financial analytics firm Block Scholes, has provided a comprehensive overview of the current state of the Bitcoin (BTC) and Ethereum (ETH) options markets.
The report, which focuses on the significant year-end options expiration, highlights key trends and shifts in market behavior as 2024 draws to a close.
BTC Options Display Muted Volatility Despite Expirations
The report indicates that open interest for BTC and ETH options remained steady, even as the market approached the critical year-end options expiration.
This stability is notable, suggesting that traders are maintaining their positions rather than turning to perpetual contracts for hedging, contributing to the lower-than-expected volatility levels during this period.
Interestingly, the BTC options market did not experience the anticipated surge in volatility following the December expirations. Instead, it saw a decline in realized volatility, with the implied volatility term structure remaining steep; longer-dated options suggest a 57% implied volatility, slightly higher than short-term options.
In contrast to BTC, the ETH options market is gearing up for potential short-term volatility. Despite a large number of ETH options expiring at the end of December, the actual market response was more subdued than expected.
However, recent movements in the implied volatility term structure indicate that traders may be anticipating more significant price fluctuations in the near term. Notably, call options for ETH have begun to dominate the market at the beginning of 2025, signaling an optimistic sentiment among traders regarding future ETH price movements.