Bybit, the world's second-largest cryptocurrency exchange by trading volume, has released a new crypto derivatives report in collaboration with Blocks Scholes. The report examines recent market changes amidst macroeconomic uncertainty.
Decline in Perpetual Swap Markets
The perpetual swap market experienced a significant decline in liquidity over the holidays, with trading volumes winding down throughout December 2024. Open interest remained stable compared to pre-expiration levels of options contracts in December 2024, indicating conservative positioning and limited hedging activities.
Volatility Disparities in ETH and BTC
ETH options markets showed a clear preference for call options. Meanwhile, BTC's open interest is rebalancing after the December expirations. A sharp divergence between implied and realized volatility for both ETH and BTC marks the largest discrepancy since the U.S. elections, indicating options traders are paying a premium for higher risk levels.
Growth in ETH Options Interest
An uptick in ETH call contracts was observed as open interest grew in December. However, the decline in realized volatility early in the year has made options traders cautious. The wide gap between short-term and realized volatility, exceeding 15 points, is the largest since the pre-election period in 2024.
Stability and caution underscore the current market situation. Despite the drop in realized volatility, the market remains on alert, indicating persistent uncertainty in investor sentiments.
