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.

December's end-of-year options expiration brought an unexpected drop as realized volatility fell to the lowest levels of the month. Perpetual swap open interest remained stable, indicating these markets weren't heavily used for hedging against expired options, likely contributing to the muted volatility. 

While most expired open interest in Bitcoin (BTC) and Ethereum (ETH) hasn't been reinvested, the balance of calls and puts remains consistent. Notably, ETH options are pricing in higher implied volatility as compared to BTC, particularly for shorter expirations, leading to a flat term structure for ETH, while BTC is offering cheaper options exposure.

In the perpetual markets, low volatility and minimal spot movements have led funding rates for nearly all tokens to mirror broader market sentiment throughout the holiday season. On the options side, BTC's term structure is noticeably lower and steeper than ETH's, with realized volatility now dipping below implied volatility levels, highlighting an intriguing shift in market dynamics.

Please check out the report’s highlights.

Open Interest Solid Amid Year-End Options Expiration

Although open interest for both BTC and ETH perpetual swaps hasn’t returned to early December 2024 highs, it remained robust throughout the significant end-of-year options expiration event. This suggests that these markets weren’t heavily utilized to 

 of the expiring options contracts, likely contributing to the lack of volatility observed during this period. Instead, trading volumes have dipped noticeably during the winter holiday season, coinciding with a collapse in realized volatility back to December 2024’s lowest levels.

BTC Option Curve Remains Steep During Call-Put Parity

The expiration of December's end-of-year options didn’t trigger the anticipated surge in volatility; instead, realized volatility has plummeted to the lower end of its recent range. The implied volatility term structure remains steep compared to both its recent behavior and ETH's, with longer-dated implied volatility around 57%, and 1-week at-the-money options trading about five points lower. Much of the expired open interest hasn’t yet been rolled into new positions, maintaining a neutral balance between puts and calls. Consequently, BTC's options market positioning is relatively neutral, lacking the leverage it had at the start of December 2024.

Huge ETH Option Expiring Doesn’t Cause Volatility

A late December spike in realized volatility didn’t carry into the new year, with ETH’s spot price currently exhibiting volatility below that of short-tenor implied volatility. Interestingly, the implied volatility term structure has undergone a steepening and re-flattening over the past week, contrasting with BTC’s slightly steeper profile. This suggests that ETH’s options market is anticipating higher short-term volatility in spot price movements. 

Despite the significant expiration of options open interest at the end of December 2024, which didn’t lead to a rollover into later expirations, call options continue to dominate the market and have increased at the start of 2025.

Advanced

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Bybit X Block Scholes Crypto Derivatives Analytics Report (Jan 2, 2025): BTC Options Continue to See Call-Put Parity, With Lower Short-Term Volatility Expected

Dive into FLock, a decentralized platform that revolutionizes the way AI models are developed, trained and deployed.

Artificial intelligence (AI) is poised to transform countless industries, but its development often raises questions about privacy, control and inclusivity. 

 is a unique decentralized platform that democratizes AI training, fine-tuning and inferencing. With its blockchain-powered infrastructure, FLock ensures transparency, security and community-driven decision-making, paving the way for AI models that align with established societal values. 

In this article, we’ll explore how FLock decentralizes AI training, its key features and its potential impact on developers, communities and users.

 platform that revolutionizes the way AI models are developed, trained and deployed. By leveraging blockchain technology and a novel approach called 

, FLock addresses critical issues in AI development, such as centralized control, lack of transparency and privacy concerns.

At its core, FLock’s mission is to democratize AI by enabling communities to participate directly in the creation and refinement of AI models. Through federated learning, FLock trains AI models across multiple decentralized devices or servers. This method ensures that data remains local, eliminating the need for raw data exchange while still enabling robust model training. By decentralizing the training process, FLock not only protects individual privacy, but also fosters a more inclusive ecosystem in which diverse contributors can collaborate.

What sets FLock apart is its integration of 

. This ensures that all contributions — whether data, compute power or feedback — are transparently recorded and fairly rewarded. Blockchain tech’s immutable ledger enhances trust among participants and safeguards the process against manipulation. Additionally, the platform’s on-chain incentive mechanisms encourage participation from a wide range of contributors, ensuring that rewards are distributed equitably.

Ultimately, FLock empowers communities to develop bespoke AI models tailored to their specific needs. By decentralizing the process and prioritizing transparency and collaboration, FLock breaks the monopoly of large corporations, creating an AI ecosystem that aligns with public ethics and societal values.

, an Oxford alumnus with a robust background in AI and blockchain technology. Sun, who serves as FLock's CEO, has an impressive career trajectory, having worked as the Director of AI for the Royal Bank of Canada and as an AI Research Fellow at Imperial College London. His vision for FLock stems from a deep understanding of both the technical and ethical challenges of AI development.

The founding team also includes other Oxford alumni, boasting over a decade of combined experience in AI research and the cryptocurrency industry. This team brings a collective blend of academic excellence and practical expertise that positions FLock to lead the decentralized AI movement.

FLock has successfully raised $11 million in funding across two rounds, reflecting strong investor confidence in its vision. In May 2024, FLock secured a $6 million seed round co-led by Lightspeed Faction and Tagus Capital, with additional backing from Digital Currency Group (DCG), Volt Capital, OKX Ventures and Inception Capital.

Later, in December 2024, FLock announced a $3 million successful funding round led by DCG and joined by prominent names like Animoca Brands, Fenbushi Capital, GnosisVC and GSR. These investments are being channelled into enhancing the platform’s testnet and federated learning client, accelerating FLock’s mission of enabling secure, collaborative AI development.

With this funding and over 1,500 nodes contributing from platforms like Numerai and Kaggle, FLock is rapidly scaling its impact on decentralized AI training.

FLock AI revolutionizes AI development through its decentralized training framework. This approach allows participants to contribute to AI model training without ever sharing their personal data. Instead, models are trained locally across devices using federated learning, which ensures that data remains with its owners while still enhancing the accuracy of the model overall. 

FLock’s reward system is designed to incentivize active participation. Contributors who provide data, computational power and/or feedback are compensated with FLOCK tokens, ensuring a fair distribution of rewards. 

FLock empowers its community through a robust governance framework. Decisions regarding AI model development, deployment and ethical considerations are driven by the community, ensuring alignment with established societal values. Through blockchain-based voting mechanisms, contributors can influence the direction of AI projects, fostering transparency and public accountability. 

FLock’s modular architecture allows contributors to participate in specific aspects of AI model development. Whether providing raw data or computational power or even refining algorithms, the platform enables a collaborative and scalable development process. 

At the core of FLock’s philosophy is its commitment to privacy and security. By leveraging blockchain technology, the platform ensures that no single entity controls the AI development process. Data remains local and protected by cryptographic measures, while the immutability of blockchain guarantees transparency in every transaction and model update. 

 begins with a blockchain and an AI layer.

The blockchain layer underpins FLock’s incentivization and security mechanisms.

The AI layer facilitates model training, refinement and deployment, leveraging both centralized and federated approaches.

Let’s have a look at the supply and demand for the FLOCK token.

FLock adopts a 1:2 ratio model between team/investors (33.3%) and community (66.7%), prioritizing community-driven growth and ecosystem expansion. The majority of tokens are allocated to incentivize user participation and long-term ecosystem success.

FLock aims to improve the future of AI development by decentralizing the training process and ensuring transparency, privacy and inclusivity. By leveraging blockchain and federated learning, FLock empowers communities to contribute to AI creation without compromising on privacy. Its innovative reward system and community-driven governance foster a fair and collaborative ecosystem. 

With significant backing and a growing network of contributors, FLock is positioning itself as a leader in decentralized AI, offering a more ethical and secure alternative to traditional AI development models. As it continues to scale, FLock is set to transform the way AI models are built and deployed.

 — and earn a share of a 10 million FLOCK prize pool. For more details, visit 

Intermediate

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FLock AI: Decentralized AI Training

In this tutorial, we’ll explore how you can complete a series of tasks in Network3 for Bybit Web3 Airdrop Arcade.

Task 1: Register for a Network3 Account and Connect Your Bybit Wallet 

: Navigate to the campaign page and click on the 

task. Click on the task, and Galxe will ask to redirect you to the Network3 register page.

: Register for a Network3 account using your email address. You may indicate a 

Task 2: Download the Network3 App and Run a Node for One Hour

 and choose your operating system to download the Network3 app.

 or powerbutton, depending upon which operating system you’re using. For ease of reference, we’ve used macOS and iOS as examples below.

: Keep running the node until the timer reaches 

Beginner

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How to Complete Network3 Tasks for Bybit Web3 Airdrop Arcade

Bybit launched the Bybit Merch Creative Challenge for university students worldwide, offering a $50,000 USDT prize pool.

The S&P 500 dropped 0.22% on Thursday, its fifth straight decline, with investors eyeing Friday’s economic updates. Coindesk Indices, an index measuring broader cryptocurrency market performance was up by 2.03%, with Bitcoin and Ether rising by 2.79% and 2.70%, respectively in the past 24 hours.

Today's top performer is XRP, which surged 1.9% following a rise in price driven by increased open interest and positive market sentiment.

Ripple (XRP), launched in August 2012, is a blockchain technology company focused on improving international payments with its cryptocurrency, XRP. XRP price surged due to increased open interest, a major XRP transfer, and market sentiment linked to Trump's inauguration. Bullish momentum is supported by high short liquidations, with key resistance levels to watch for further price movement.

Check Out the Latest Prices, Charts, and Data of 

 for university students worldwide, offering a $50,000 USDT prize pool. Participants can design exclusive Bybit merchandise, with submissions open until Jan. 15, 2025. Winners will be announced on Feb. 1, 2025, across four prize categories.

Yesterday, Bitcoin Spot ETFs recorded a total inflow of $84.8M, driven by $107.9M from non-GBTC funds, partially offset by a $23.1M outflow from GBTC.

, offering an airdrop for participants who complete tasks like swapping and bridging using the Mango wallet. Points earned through tasks determine airdrop rewards. Join via the Mango wallet and follow steps on the testnet dashboard.

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Bybit Launches $50,000 Merch Design Challenge for University Students Worldwide

Crypto

Crypto investment can be lucrative, but it brings new risks, especially in the DeFi realm. Is crypto-insurance the solution for everything? Learn more.

The crypto market is growing in leaps and bounds. As it does so, it’s gaining more acceptance in the traditional financial system. Governments are exploring their options for incorporating cryptocurrencies into their central banks, while financial institutions are investigating new crypto-inspired products to offer their customers. The world of 

 is an exciting one, offering consumers numerous worldwide options to access vibrant new financial products, applications and services. But crypto also brings new risks. Is crypto insurance, which promises the protection we seek, the next big thing?

Crypto insurance is a type of insurance policy designed to protect against losses associated with cybersecurity breaches. Most major crypto exchanges carry at least some insurance to protect the digital assets in their custody against losses from theft and other security breaches. 

Because cryptocurrency isn’t legal tender, it’s not protected the same way other deposits might be by bank insurance. For example, in the United States, bank deposits are typically protected by the 

 (FDIC) or Securities Investor Protection Corporation.

On contrary, exchange insurance is designed to protect against losses incurred in covered security events. However, total losses may occasionally exceed insurance recoveries, leaving some investors unable to recover their entire investments. Additionally, policies don’t cover personal losses, such as those associated with lost credentials or personal data breaches — which means that there can be coverage gaps for some users.

Do Crypto Exchanges Insure Your Digital Assets?

The crypto insurance industry is still in its infancy, and many crypto assets simply aren’t protected by insurance. Most insurance policies are designed for businesses and corporations, not for private consumers.

Crypto wallets and exchanges purchase insurance policies with coverage, designed to protect against cyber theft and security threats. Other types of coverage are still in development and may feature additional protection, such as decentralized finance (

) insurance, which could feature protection against the loss of funds associated with the shutdown of a service provider, lost private crypto keys, or similar catastrophes. However, these policies aren’t yet available for consumers to purchase.

In other words, the average consumer’s protection depends largely on the services they access and use. For the safest experience, the most basic level of security should include two-factor authentication (2FA) as a standard. Users are asked to provide additional information, such as a code, whenever they log in. Using a cold wallet for the majority of digital assets is also advisable. 

 are more convenient, but they’re more easily accessible to hackers. Cold wallets are offline and are typically air-gapped, making them well-protected from those with ill intentions.

Most exchanges offer additional security measures, including crypto insurance programs. These aren’t backed by government-sponsored insurance plans the way conventional banks are, but if the exchanges are hacked, your funds will be protected and you’ll be compensated for your loss up to the amount specified in the insurance policy.

Do We Need Insurance in the Cryptocurrency Ecosystem?

, numerous hacks have put crypto funds in peril. The 

 resulted in more than $600 million being stolen from Ethereum, Binance Smart Chain and Polygon wallets. 

 nearly $150 million in Ether, Bitcoin and stablecoins in two separate hacks, and in December, hackers stole nearly $200 million from Ethereum and BSC wallets.

Investing in cryptocurrency brings the promise of major returns, but the risks can be very real with a volatile crypto marketplace. There’s a real need for crypto insurance policies, but insurance industry policies and premiums tend to be based on historical data. Because the crypto marketplace is still so new, historical data tends to be lacking, and market volatility can make the process even more difficult. 

When Bitcoin and other cryptocurrencies skyrocket in value, hot wallets and exchanges become especially attractive to hackers and thieves. For example, on Jan. 20, Crypto.com confirmed that it had been hacked with over 400 users being affected with unauthorized withdrawals on their accounts. Subsequently, Lloyd’s of London also reported using a variety of risk mitigation strategies, including cold storage, multi-signature wallets and server-side security.

Crypto insurance can fill the gaps, protecting against losses in a vulnerable, volatile system.

When Bitcoin was first unveiled, it was intended to serve as an alternative to the traditional financial markets. It would serve as a way for people to send and receive money via the internet without the need for an overseeing body or centralized authorities, but it would work much like any other currency.

Since its introduction, Bitcoin has grown in popularity and value, and numerous other cryptocurrencies have subsequently been introduced. The cryptocurrency markets have expanded rapidly, and crypto exchanges have had to move quickly to protect the integrity of their markets. The regulatory environment has evolved alongside the crypto markets, too. Regulators have gone from simply tolerating the existence of cryptocurrency to actively engaging with the markets.

From the Swiss Financial Market Supervisory Authority (FINMA) and Germany’s Federal Financial Supervisory Authority to the U.S. Securities and Exchange Commission (SEC), more countries’ regulatory bodies are taking proactive approaches when it comes to cryptocurrency.

 such as the Financial Action Task Force (

) have issued guidance regarding cryptocurrency, as widespread adoption continues with market volatility a commonplace occurrence. The ultimate goal is to create a strong framework, or regulatory environment, to inhibit fraud and money laundering without quashing the free-thinking and innovation that encourage economic development and let crypto markets continue to thrive.

Since Bitcoin’s introduction in 2009, the cryptocurrency market has grown in fits and spurts. Still, the market was largely retail-driven until the mid-2010s, when the total market value was valued at around

. At that time, the market entered what was known as a crypto winter, and prices cooled. Speculators fled the market, leaving only diehard crypto users who continued supporting the industry.

Their hard work paid off in the form of stronger infrastructure, new products and soaring demand. The long bitter crypto winter is now over, and institutions are ready to add crypto products to their investment portfolios. The demand for crypto products is hotter than ever, and the general public is clamoring for cryptocurrency and tailored products, financial services — and more regulated infrastructure.

The cryptocurrency market has also never been stronger or more viable for venture capital funds, banks and other institutional investors.

 investing in digital assets include Morgan Stanley, JPMorgan Chase, Citibank and BNY Mellon, with institutional investors beginning to significantly outweigh individual investors in the crypto marketplace. Retirement accounts are also increasingly turning to crypto investments.

There’s no better time than now to unveil a crypto insurance market.

Surge for Decentralized Finance (DeFi) Products

DeFi is still a relatively new concept in the crypto marketplace. Through the blockchain, users can complete hundreds or thousands of individual peer-to-peer transactions with complete security and privacy before settling them on the blockchain.

Decentralized finance refers to financial services that enable users to trade, borrow or lend via cryptocurrency on public blockchains. DeFi uses smart contracts to facilitate transactions without the need for a third-party regulator and facilitates peer-to-peer transactions through the use of DApps and/or exchanges.

The unregulated atmosphere surrounding the crypto marketplace and DeFi have allowed for some exciting and perhaps unexpected outcomes. In the traditional financial industry, regulations are intended to keep all parties safe and secure — but they can also have a dampening effect, preventing innovation and creativity that allow for stronger financial outcomes for both parties. In DeFi, transactions are built on the concept of “trustlessness.”

This doesn’t mean you cannot trust the transaction. Rather, it means that you do not need to put your trust in a third party or intermediary to complete the transaction. The process instead depends on smart contracts, a series of protocols that must be accomplished before the transaction can complete. This process protects both you and the other party in a transaction. Once the transaction is sent, it’s final. It cannot be reversed or altered in any way.

The growth potential for DeFi is enormous, which is why so many major players are looking to it, such as JPMorgan Chase and the Royal Bank of Canada.

Currently, the total value locked across DeFi stands at 

, compared to about $435 billion for this time last year. Comparatively, the

 is threatened by consumer inflation rates in the U.S.

This makes stablecoins and other cryptocurrencies with yields of 20 percent or greater even more attractive, for both individual and institutional investments. As the infrastructure has advanced, so has the access to and increased adoption of permissioned applications requiring KYC and Layer 1 blockchains, and Layer 2 scaling solutions for increased speed and improved asset management.

This has led to a new stage of evolution, with new cryptocurrencies, stablecoins and non-fungible tokens bringing new products and services — not just to more countries, but potentially to the entire world. This includes the estimated 1.7 billion currently unbanked people who could obtain simple mobile wallets, granting them instant access to the currency of their choice at a fraction of the cost of a traditional financial institution.

Bitcoin was the first cryptocurrency in history, and its blockchain was initially slow to attract fans. The first BTC cost just a fraction of a penny. Over time, its value slowly and steadily increased until it was nearly a dime.

Although at first only intended as a way to opt-out of the traditional banking structure after the 2007 financial crisis, the Bitcoin blockchain has grown to so much more. Recently, its price has soared and is currently trading

Cryptocurrency is a volatile market, though, and prices can drop quickly, even within a few hours — which is why experts recommend keeping only

 in cryptocurrency investments. Crypto insurance isn’t necessarily designed to cover the devaluation of your crypto, but it can protect against certain types of losses, such as a misplaced or forgotten key, or hacking or theft.

Increasing Crypto Hacks and Cyber Infiltration

As more people opt into cryptocurrency for everything from day-to-day transactions to investing for retirement, they attract another type of attention: that of bad actors with ill intentions. Hackers, infiltrators and thieves find the large volumes of currency passing through exchanges to be irresistible, and they use every tool at their disposal to access it. Security has been a concern for Bitcoin since its inception.

Blockchain technology has always been secure and difficult to hack, but it’s not totally impenetrable. Security risks are almost inevitable at every stage of the transaction process. From hacking into hot wallets to outright scams, hackers will attempt to access digital funds any way they can.

They’ll also attempt to infiltrate security systems. Crypto exchanges hold private wallet keys on behalf of their users via a custodial structure. This allows for speedier transactions, improved service and protection against loss. However, it can also pose a grave cyber threat if the administrative key is compromised by a security breach. The “admin key” provides complete control over smart contracts. If user funds are lost through a breach, they can only be protected for the amount insured by any policy covering them.

Therefore, both leading-edge security and high-quality insurance coverage are essential for protecting your digital assets when using a crypto exchange.

Generally, crypto insurance is designed to cover institutional losses. If a crypto exchange is affected by a security breach, its losses will be covered up to the amount covered in the policy. However, this emerging industry is beginning to recognize the need for individual crypto coverage as well. One insurer is now offering the service:

 to create a crypto policy that covers losses beyond that which an exchange might typically include. The policies range in cost from $10 to $750, and cover account holders’ digital assets against hacking, phishing, malware, device theft, trojan software and brute force attacks. There are some exclusions, however, and certain types of losses aren’t covered, including price fluctuations, blockchain failures and hardware loss or damage.

Other insurers haven’t yet entered the crypto insurance market — but they likely will as the insurance industry continues to heat up.

Crypto has gone mainstream, and as more people adopt and invest in digital assets, the industry will continue to expand. The potential for this virtually unregulated industry is nearly limitless — which is just what makes the risk-averse insurance market hesitate. That doesn’t mean that there aren’t plenty of opportunities for you, however. Proceed with caution, keep your wallet secure, and choose your investments wisely.

Is Crypto Insurance the Next Big Thing?

Grab Up to 5,000 USDT in Rewards

Grab Up to 5,000 USDT in Rewards