Bybit X Block Scholes Crypto Derivatives Analytics Report (Dec 18, 2024): BTC Notches ATH Following Last Week’s De-leverage; ETH Options Send Bullish Signal Still

Key Highlights:

Our weekly crypto derivatives analytics report delves into macro events, the current state of crypto and trading signals from spot trading volume, and futures, options and perpetual contracts.

BTC’s spot price has reached an all-time high, yet the derivatives markets have not shown the same bullish leverage as in previous records this quarter. This discrepancy is likely due to a reset in leverage last week, which has brought funding rates back to normal levels, slowed the growth of futures yields and reduced the preference for call options. Exposure in the futures market remains concentrated in December’s end-of-year BTC contracts, with little growth observed during the recent spot rally. In the perpetuals market, funding rates have returned to default levels after a period of excessive leverage. 

Meanwhile, in the options market, open interest in ETH call options is still far higher than that of OTM puts, suggesting that traders have not yet been shaken out of bullish ETH positioning in options.

Please check out the report’s highlights.

BTC Futures Volume Trends Down Despite New ATH

Sources: Bybit, Block Scholes

BTC has dominated trading volumes since the reset of leveraged positions early last week. However, despite reaching another record-high spot price, trading volumes have been declining since Dec 9, 2024. Open interest in BTC contracts is concentrated in December’s end-of-year contract, which has a higher open interest than all ETH contracts combined. This suggests a more cautious market than before the recent wave of liquidations, indicating that the bullish rally in spot prices is occurring alongside healthier leverage levels in the derivatives markets.

Perps Remain Steadfast

Sources: Bybit, Block Scholes

This week, the rise in BTC spot prices to new all-time highs has coincided with a decline in open interest for both BTC and ETH perpetual swap contracts. This suggests that, despite falling funding rates, traders still seek exposure through these contracts. Recently, ETH has experienced a more significant decrease, while BTC's open interest has fluctuated less. This trend reflects the differing performances of their spot prices; BTC has surged higher, while ETH has remained relatively rangebound, struggling to break above the psychological barrier of $4K.

ETH Calls Still Transcend Puts

Sources: Bybit, Block Scholes

Open interest in ETH call options remains significantly higher than in OTM puts, indicating that traders retain their bullish positioning in ETH options. While OTM calls dominate the open interest across various tenors, longer-dated OTM puts have seen notable trade volume over the past 10 days. However, this has not resulted in an increase in open put options, suggesting that demand for downside protection hasn’t risen as expected.

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