Key Points
- Bitcoin options market remained steady during year-end expirations, according to a report by Bybit and Block Scholes.
- Ethereum options are expected to experience temporary volatility.
A recent report by cryptocurrency exchange Bybit and analytics firm Block Scholes disclosed that the options market for Bitcoin (BTC) stayed stable during year-end expirations.
This stability was unexpected as options close to their expiration date usually cause price fluctuations.
Bitcoin Options Stability
The report indicates that traders, while cautious, were confident about the stability of their options. They did not excessively depend on perpetual contracts to hedge the delta of expiring options. Consequently, the open interest (OI) in Bitcoin remained relatively unchanged, despite low volatility and failure to bounce back to its higher levels in December.
The Bitcoin futures OI has dipped below the $60 billion mark. The total BTC OI is currently around $56.6 billion, having declined at the beginning of January 2025. However, it hasn’t dropped to early November levels, when it fell below $40 billion.
The report highlights that the implied volatility term structure for BTC options continues to be steep. The implied volatility is expected to remain at 57% over a one-week period for options trading five points lower.
Most of the expired open interest hasn’t been reinvested yet, leading to a neutral call-put balance. This suggests that BTC’s options market has limited leverage compared to its position at the start of December 2024.
Ethereum Options Volatility
In a similar manner, the options for Ethereum (ETH) remained steady through the end of December 2024. However, ETH’s spot price is displaying lower volatility compared to its short-term implied volatility.
Over the past week, the implied volatility term structure for ETH options briefly dipped before leveling out again. Unlike BTC’s consistent downturn, ETH’s pattern indicates that its options market is gearing up for potential short-term volatility in spot price movements.
Despite nearing expiration dates, ETH call options have picked up pace at the start of 2025. At the time of writing, Ethereum OI is at $25.5 billion, returning to its mid-December levels.
