Key Points
- Bybit’s report indicates macro factors affecting crypto market turbulence and Bitcoin’s struggle to cross $100K.
- Bitcoin and Ethereum options markets show diverging trends and increased call options for Ethereum.
Bybit, the second-largest crypto exchange globally by trading volumes, recently released a report. It highlighted the macro factors causing turbulence in the crypto market. It also discussed Bitcoin’s struggle to breach the $100K mark. The report emphasized the potential impact of the inauguration of Donald Trump, often referred to as the “crypto president”, on the future direction of the market and investor sentiment.
In recent times, the crypto derivatives market has been fraught with heightened uncertainty. Investors eagerly anticipate a significant political transition with the inauguration of Donald Trump. The crypto industry has high expectations from Trump, who pledged to make America the global hub of crypto during his election campaign.
Market Changes and Trends
However, Bybit’s research report reveals that the perpetual swap market experienced a substantial liquidity drop over the holiday period. Trading volumes plummeted in the past month, leading to a decrease in overall volatility across the crypto market.
Open interest remained steady compared to the period before the major options contract expiration in December 2024. This suggests a cautious approach and limited hedging activity in the perpetual swap markets.
The options markets for Ethereum and Bitcoin are signaling significant changes as we enter the new year. There is a distinct divergence between implied and realized volatility. After the December expiration, Bitcoin’s open interest is rebalancing following the expiration of options contracts.
Ethereum Call Options Gaining Traction
In contrast, Ethereum’s options market has shown a marked preference for call options. The difference between the 30-day implied volatility and the 7-day realized volatility for both cryptocurrencies has reached its largest gap since the US elections.
This indicates that options traders are pricing in high levels of risk and volatility, despite the relatively calm market conditions at the surface.
The Bybit Research report shows a major reshuffling in Ethereum (ETH) open interest, with call options gaining traction since December, though put options still dominate in overall volume.
However, the realized volatility in 2025 so far has tempered the optimism surrounding ETH options, thereby forcing option traders to reassess their positions. The volatility term structure has steepened, with short-term volatility (measured over 30 days) remaining more than 15 points above its realized counterpart.
As the market stabilizes, investors are exercising caution, reflecting underlying uncertainty that may influence the crypto market in the coming months.
