The latest crypto derivatives analysis report from Bybit and Block Scholes sheds light on critical market trends as Bitcoin (BTC) and Ethereum (ETH) navigate key options expiry events at the turn of the year. Despite seasonal lulls and shifting volatility patterns, the data reveals nuanced positioning across both markets — with BTC demonstrating stability and ETH showing signs of building momentum for potential near-term price movement.
Year-End Options Expiry: Open Interest Remains Steady
As 2025 began, the crypto markets experienced a period of relative calm during a major options expiry cycle. Notably, open interest in BTC and ETH perpetual contracts has not yet rebounded to early December 2024 levels. However, the resilience observed during year-end expiry indicates that traders are not aggressively using perpetual swaps to hedge delta exposure from expiring options.
This measured approach helps explain the subdued volatility seen in recent weeks. With the winter holiday season contributing to lower trading volumes, realized volatility has dropped to its lowest point since December, aligning with reduced market activity. The stability in open interest suggests a more balanced and less leveraged market structure — a sign of maturing institutional participation and cautious retail sentiment.
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BTC Options Curve Stays Steep at Parity
One of the most intriguing findings from the report is the behavior of Bitcoin’s options curve. Despite expectations of heightened volatility around expiry, realized volatility actually declined, settling near the bottom of its recent range. Meanwhile, the implied volatility term structure for BTC remains steep, with longer-dated options hovering around 57%, while one-week at-the-money (ATM) options trade approximately five percentage points lower.
This divergence highlights a market pricing in sustained uncertainty over the medium to long term, even as short-term risks appear contained. Most of the expiring contracts were not rolled over, and the put-call ratio stayed neutral — indicating neither strong bullish nor bearish bias among traders.
The lack of leverage buildup compared to early December 2024 underscores a more conservative posture. Rather than betting on explosive moves, BTC options participants seem to be adopting a wait-and-see approach, possibly awaiting macroeconomic catalysts or on-chain developments before taking directional positions.
ETH Options Expiry Fails to Trigger Volatility Spike
Ethereum faced a similar expiry event at the end of December 2024, yet it too avoided significant price swings. While realized volatility spiked briefly in late December, it failed to carry into the new year. Currently, ETH’s spot price volatility is running below its short-term implied volatility — a signal that options markets are pricing in future movement that hasn’t yet materialized.
Interestingly, ETH’s implied volatility term structure showed a brief steepening last week before flattening again — a pattern that contrasts with BTC’s persistently steep curve. This divergence may reflect differing market expectations: while BTC investors anticipate prolonged uncertainty, ETH traders could be positioning for a defined burst of activity in the near term.
Despite the quiet price action, early 2025 has seen a surge in call option dominance for Ethereum. This growing appetite for upside exposure reflects underlying optimism in the ecosystem — possibly driven by anticipated protocol upgrades, increased Layer-2 adoption, or broader DeFi revival narratives.
Market participants appear to believe that ETH is consolidating ahead of a potential breakout, making it a prime candidate for short-term volatility once catalysts emerge.
Why This Matters for Traders
Understanding these dynamics is crucial for both short-term traders and long-term investors. For those using derivatives, the current environment offers clues about where risk and opportunity lie:
- A flat or declining realized volatility in a high-implied-volatility environment can create favorable conditions for selling premium (e.g., via credit spreads or iron condors).
- Neutral put-call ratios suggest low conviction — often a precursor to sharp moves when sentiment eventually shifts.
- The growing call bias in ETH may foreshadow increased bullish momentum if spot prices break key resistance levels.
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Key Takeaways from the Bybit x Block Scholes Report
- BTC exhibits structural stability: With a steep volatility curve and neutral positioning, Bitcoin remains resilient amid macro uncertainty.
- ETH is quietly building pressure: Despite low realized volatility, rising call dominance suggests traders expect movement soon.
- Market maturity is evident: Reduced leverage and absence of panic hedging reflect a more sophisticated participant base.
- Seasonality plays a role: Lower volumes during holidays contribute to compressed volatility, but this often precedes renewed momentum.
Frequently Asked Questions (FAQ)
Q: What does a steep implied volatility term structure mean for BTC?
A: It indicates that traders expect higher uncertainty or larger price movements further out in time compared to the near term. This often reflects macro-level concerns or anticipation of future events like halvings, regulatory decisions, or ETF approvals.
Q: Why didn’t ETH experience a volatility spike after options expiry?
A: The lack of a spike suggests that most positions were either closed or effectively hedged ahead of expiry. Additionally, holiday-related low liquidity likely suppressed sharp price reactions.
Q: What does rising call dominance in ETH suggest?
A: Increasing call volume signals growing bullish sentiment. Traders are positioning for upside, potentially betting on network upgrades, increased staking yields, or broader market recovery.
Q: How can traders use this information practically?
A: Traders can assess whether options are overpriced or underpriced relative to expected moves. For example, high implied volatility with low realized volatility might favor option-selling strategies.
Q: Is low open interest a bearish sign?
A: Not necessarily. While lower open interest can indicate reduced interest or caution, it can also set the stage for explosive moves when new capital enters the market.
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Core Keywords Integration
Throughout this analysis, we’ve naturally incorporated core keywords that reflect user search intent and industry relevance: BTC options, ETH options, implied volatility, realized volatility, open interest, options expiry, derivative market analysis, and crypto trading strategy. These terms help ensure visibility across search engines while maintaining readability and depth.
As the crypto derivatives landscape evolves, reports like this one from Bybit and Block Scholes provide essential insights into how sophisticated traders are navigating uncertainty. Whether you're monitoring BTC's steady pulse or watching ETH for signs of an imminent breakout, understanding these underlying metrics can make all the difference in timing your next move.
For traders seeking actionable intelligence and advanced tools to interpret complex market signals, staying informed through reliable data sources is key.