What the future might hold in terms of the evolution of crypto options trading and how innovations can improve market efficiency?

Options trading has revolutionized the crypto derivatives market and improved risk management liquidity. The newly introduced IBIT options have been a great addition to this transformational process and have attracted much institutional interest, while bringing crypto closer to the traditional financial market. 

In this article, we’ll examine the current state of the crypto options landscape, what the future might hold in terms of the evolution of new strategies,and how these innovations can improve market efficiency. We’ll also examine how 

 (CEXs) could converge the crypto and traditional finance (TradFi) markets.

Crypto options trading emerged as a frontier of the cryptocurrency derivatives market. Its roots date back to 2016, when the first BTC options market launched. It can be categorized into three different stages as follows.

These three stages represent some of the key developments of crypto options trading as it’s transformed from a niche product to a sophisticated financial instrument, attracting retail and institutional traders. Despite the rapid adoption of crypto options trading by key players, its trade volume and level of sophistication still lag compared to trading in traditional markets. However, this could change due to new innovations.

2024: A Milestone Year for Crypto Options Trading and Potential Market Structure Transformation

2024 has been an important year for crypto options trading. In addition to unprecedented growth and increasing institutional adoption, the launch of Bitcoin ETF options, particularly BlackRock's iShares Bitcoin Trust (IBIT), which attracted nearly $2 billion in notional exposure on its first day of trading, could be a watershed moment for crypto options trading. These crypto ETF-related options could be an effective way for TradFi and institutional investors to hedge against the risks associated with crypto’s volatility. These tools could help transform the broader crypto trading landscape and market structure, particularly in liquidity and institutional participation, as follows.

The crypto options market is expected to grow even further in 2025, based on the continuation of positive market sentiment, with new innovations in the pipeline. Some key expectations for the crypto options market in 2025 include the following:

Bybit's Innovations Lead Crypto/TradFi Market Convergence

Bybit is a key player in the convergence between crypto and TradFi markets, particularly in options trading. Its exchange has introduced innovative features that bridge the gap between these financial ecosystems, catering to both institutional and retail traders.

 also simplify collateral management and reduce cross-currency settlement complexity. This aligns with the growing trend of 

-settled derivatives in crypto markets, mirroring the cash-settled options common in traditional finance.

Bybit has expanded its options offerings beyond 

, broadening the scope of tradable assets and mirroring the diverse options available within traditional markets.

Bybit's implementation of advanced risk management tools, such as

, allows traders to analyze and hedge their positions more effectively, bringing crypto options trading closer to the level of sophistication seen in TradFi options markets. Additionally, its user-friendly interface makes options trading more accessible to retail traders, potentially expanding the market's participant base. 

These innovations contribute to the overall maturation of the crypto options market, facilitating the convergence of traditional finance and digital asset trading while addressing the unique challenges of cryptocurrency volatility and liquidity.

The rapid evolution of crypto options trading, particularly with the introduction of Bitcoin ETF options, marks a significant milestone in the cryptocurrency market's maturation. This development has substantially enhanced market efficiency, liquidity and risk management capabilities, attracting considerable institutional participation. The unprecedented trading volumes and sophisticated strategies employed in crypto options trading, such as 

 writing and synthetic long positions, signal a convergence with traditional financial markets.

Looking ahead, the crypto options market is expected to continue growing and innovating. While expectations are for BTC to reach a new all-time high in this cycle, the options market will likely see increased volume and more diverse product offerings. However, this potential growth remains subject to regulatory developments and macroeconomic factors that play a crucial role in shaping the future of crypto options trading. While the ties between crypto and TradFi are expected to grow, CEXs such as Bybit emphasize the importance of this convergence, which aligns with its vision of bridging the gap between crypto and traditional finance.

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Beyond Volatility: How Options Trading Is Paving the Way for a New Era in Cryptocurrency

Where will SOL go after reaching a new ATH?

 reached a new all-time high in mid-November 2024 as recent developments in the Solana ecosystem and support from its community strengthened the market's confidence in SOL's outlook. Some of the most actively traded tokens in the market, such as 

, MUSTARD and FATHA, are all based in Solana’s strong community. Data from DefiLlama shows that the monthly trade volume of DEXs on Solana reached $100 billion for the first time in November 2024.

Figure 1: Monthly trade volume of DEXs on Solana. Source: DefiLlama

 this year with a 117% YTD gain, while BTC and ETH surged 113% and 45% in the same period (respectively). While the market seems to expect BTC to trade sideways until the end of the year, the market's attention could shift to major alts such as SOL. This week at 

, we’ll dive into the derivatives trading data on Bybit to analyze traders' sentiment toward SOL. 

Long Accounts Accumulate on SOLUSDT Perps 

Derivatives trading on Bybit shows that traders have increased interest in betting SOL with an upside bias. 

 page on Bybit shows that the open interest of 

 has been maintained at a high level, while the number of total long accounts has been increasing for at least four consecutive days.

The price of SOL has been relatively soft after hitting its ATH at $264. That's when the number of long accounts started to increase. This divergence could imply that derivatives traders have been gearing up for a potential trend reversal, thereby opening more long positions.

We've highlighted the importance of open interest and the long/short ratio in perpetuals trading 

. Learn more about how to interpret this data in the 

Figure 2: SOLUSDT Perpetuals daily open interest on Bybit. Source: Bybit 

Figure 3: SOLUSDT Perpetuals daily long/short ratio on Bybit. Source: Bybit

The upside bias of SOL can also be seen in the Bybit options market. Daily notional open interest in SOL options has been increasing to over $50 million, indicating that options traders have been increasingly willing to enter the SOL market with options. This could also be a sign of possible strength in the momentum of the price. Data shows that most traders have been eyeing contracts with a Nov 29, 2024 expiration, while open interest in December 27 expiration contracts is expected to increase as we move forward to year's end.

Figure 4: Open interest of SOL options on Bybit. Source: Bybit

Figure 5: Open interest by expiration of SOL options on Bybit. Source: Bybit

For options contracts with a Nov 29, 2024 expiration, most of the open interest is focused on the $240 and $260 strike prices, as indicated in Figure 5. While both strike prices are too far off from the current price level (about $230 as of Nov 26, 2024), this could imply that some options traders still believe that the price of SOL could hit its ATH again by the end of the month, while the OI on $100 puts could be part of the overall hedging strategy.

Figure 6: Open interest by strike of SOL options with Nov 29, 2024 expiration on Bybit. Source: Bybit

What's even more interesting is the open interest of SOL options contracts with a Dec 27, 2024 expiration. It shows a notable build-up of open interest at the $300 and $360 strikes. This could indicate that some options traders are bullish on SOL, and are betting the price will have a chance to jump over $300 by the end of the year.

Figure 7: Open interest by strike of SOL options with Dec 27, 2024 expiration on Bybit. Source: Bybit

The derivatives market's response to Solana's new all-time high reveals a sophisticated approach by institutional traders. While a new ATH could be exciting, the real story lies in the positioning of derivatives, where smart money maintains controlled bullish exposure through options and perpetuals. However, the crypto market is known for its constantly changing nature. It's important to keep up-to-date and reassert such data from time to time, as market sentiment may shift at any time.

: Investing in cryptocurrencies and their derivatives involves substantial risk of loss, and isn’t suitable for every investor. This article provides facts for educational purposes only, and does not represent any financial advice. Prior to making any investment decisions, please ensure you fully understand the risks involved and seek independent advice if necessary. Our customer support team is available to assist you with any inquiries.

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Learn From Smart Money: Derivatives Traders Show Optimism on SOL After a Fresh ATH

What does a strong BTC price mean to the broader Bitcoin ecosystem?

The conversation around the Bitcoin ecosystem has returned as the price of BTC reached another all-time high, over $90,000, for the first time in November 2024. High expectations from a pro-crypto U.S. administration, a fresh easing cycle from the Fed, strong demand for crypto ETFs and institutional adoption could all be driving forces behind BTC's strong performance.

On the other hand, the performance of the Bitcoin ecosystem projects and their related assets was mixed. The 

 of Bitcoin DeFi reached a new high, while the floor price of most ordinal inscriptions didn’t follow BTC's strong momentum.

In this article, we’ll look into what BTC record performance means to the broader Bitcoin ecosystem. The possibility of BTC's strong momentum creates tailwinds for sub-verticals within the ecosystem, and the chance of speeding up the adoption of Bitcoin scaling technologies as interest increases. 

 (DeFi) for Bitcoin could be one of the sectors that benefit from a high BTC price. Bitcoin DeFi is an emerging sector within the Bitcoin ecosystem that aims to leverage Bitcoin's security and infrastructure for DeFi applications. 

 (TVL) of Bitcoin DeFi has reached over $4 billion for the first time as the price of BTC surged to over $90,000. With BTC's price expected to rise further, overall liquidity in the Bitcoin network could increase and more BTC could be locked into DeFi protocols.

Figure 1: TVL of Bitcoin DeFi has reached $4 billion for the first time. Source: DefiLlama

 are some of the popular narratives among Bitcoin DeFi. These related projects are expected to benefit from increased interest, activity and liquidity in the Bitcoin network. For example, some BTC holders could look to generate yield from their idle holdings. BTC's increasing value might encourage some other holders to mint and use BTC-collateralized stablecoins.

The current bullish sentiment may create a positive feedback loop. Rising prices could fuel investors' optimism, driving further investment into the Bitcoin ecosystem and potentially leading to a self-sustaining growth cycle.

If the demand for Bitcoin DeFi is set to increase, the interest in Bitcoin's scaling solutions might also increase. That's because developers could take advantage of the market attention of the world’s leading crypto, as well as some of the recent technology breakthroughs under the hood, to build (

) on Bitcoin. This would especially apply to expanding Bitcoin’s 

 (L2) solutions, allowing the blockchain to handle transactions more efficiently. On top of that, building sophisticated 

Figure 2: TVL of Stacks — a major Bitcoin L2 — recovering from Q2’s decline. Source: DefiLlama

, a Bitcoin L2 that provides smart contract capabilities for the Bitcoin blockchain, might see increased interest. Data from DeFillama shows that Stacks' TVL has been gradually recovering from Q2's decline, and

, its native token, has posted a 20% YTD gain.

In addition, a strong BTC price could benefit BTC-related infrastructure. Projects such as 

, a Bitcoin-based noncustodial wallet that allows users to store and manage assets on Bitcoin, and Nomic, which bridges Bitcoin to the 

 ecosystem, could see growth due to the increased demand for interoperability, allowing Bitcoin to be used in DeFi ecosystems beyond its native network.

Ordinal Inscriptions Struggle to Regain Traction

 were some of the important narratives in the Bitcoin ecosystem in 2023. However, Ordinal inscriptions weren’t immune as the market trend turned sour in Q2 2024. As the price of BTC has rebounded, some of the ordinal inscriptions seem to have struggled to regain traction. Figure 4 shows the floor price of Runestone, which is the third-largest market cap ordinal inscription collection on CoinGecko. It hasn’t seemed able to follow BTC’s recent strong momentum, at least not yet. Although some other collections may have shown some traction recently, its floor price is still quite far from its previous peak.

Figure 3: Total market cap of NFTs on Bitcoin. Source: CoinGecko

Figure 4: Floor price of Runestone over time. Source: CoinGecko

BRC-20 tokens seem to be in a similar situation. For example, 

 have a $1.3 billion combined market cap, and take up over 80% of the total BRC-20 token market cap. They’ve been struggling to follow BTC's uptrend and largely remain in the same trading range that they’ve been in for months, notwithstanding some recent short-term rebound.

Philosophical Difference Could be a Challenge

The future development of the BTC ecosystem could still face multiple challenges — despite all the innovations that have been pushing the boundaries of the oldest blockchain — and community division is a major challenge.

There's still a philosophical debate within the Bitcoin community about whether Ordinal inscriptions and BRC-20 tokens align with Bitcoin's original purpose. While Bitcoin's 

 (or "digital gold") narrative is widely accepted in the community — and has even begun to win buy-in from the mainstream — Ordinal inscriptions and BRC-20 tokens may often be seen as more risky and speculative by nature, especially if they don't offer significant advantages. This contention could pose a challenge for both Ordinal inscriptions and the BRC-20 standard, at least from an investment perspective.

Suppose the market perceives Ordinal inscriptions and BRC-20 tokens as less useful or integrated into financial ecosystems such as BTC. In that case, their value may not be fully realized by the market, and their liquidity might also not be as high as for BTC — meaning price movements could be more volatile and less directly correlated with BTC's price. In that scenario, even a skyrocketing BTC price may not be able to directly benefit the Ordinal inscription space and BRC-20 tokens.

On the other hand, Bitcoin DeFi is painting a relatively rosier picture. Since Ethereum-based DeFi has been around for a long time, the concept is easy to understand and is being tested in the market. Extending that into the Bitcoin blockchain thus seems more digestible. Besides, the demand for staking, restaking, native yield and BTC-backed stablecoins has been increasing in proportion to the price of Bitcoin. At the same time, recent tech innovations seem to cater more to DeFi activities on Bitcoin, rather than improving the user experience of Ordinal inscriptions and BRC-20 tokens. 

The impact of Bitcoin's record-high prices extends far beyond mere numbers on charts. As we've examined throughout this analysis, a rising BTC price could create a cascading effect across the entire Bitcoin ecosystem. However, it's crucial to recognize that sustainable ecosystem growth requires more than just price appreciation. 

While record-high prices certainly attract attention and capital, they must be accompanied by fundamental improvements in scalability, accessibility and user experience. The challenge for the Bitcoin ecosystem will be to harness this increasing momentum to build lasting infrastructure and develop practical applications that extend far beyond speculative trading. 

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Will the Bitcoin Ecosystem Benefit From a Record High BTC Price?

Traders seem to expect BTC’s momentum could slow down a bit after the price hit over $97,000.

Positive sentiment has continued to fuel the cryptocurrency market as the expectation of further institutional adoption of 

 keeps growing. Options trading of BlackRock’s Spot Bitcoin ETF IBIT 

 with a bang, attracting almost $2 billion on the first day of trading. The hope of more spot ETF derivatives to change the market structure with additional institutional money onboarding crypto is high.

, we explored the possibility of the market being overleveraged, which could be painful if the current leverage unwinds. Data from CryptoQuant shows that the estimated leverage of the current BTC markets has reached another YTD high.

Derivatives data on Bybit shows that traders seem to expect that BTC’s momentum could slow down a bit after the price hit over $97,000, and are focusing more on downside protection.

Figure 1: Bitcoin estimated leverage ratio at 0.23. Source: CryptoQuant

BTC Options Open Interest Returns to Previous High While Perps Are Catching Up

Derivatives traders have been actively participating in BTC markets as 

 on Bybit has surged to over $3 billion, on par with the previous high on Nov 14, 2024. Although the options OI has increased, it still hasn’t surged above the previous high. At the time, BTC’s price had already jumped to over $97,000. If the OI doesn’t follow suit and break above the previous high in the coming days, this could be a sign that the market could become a bit exhausted — something for all market participants to be aware of.

Figure 2: Daily open interest for BTC options on Bybit. Source: Bybit

 have also seen increased open interest in recent days. Perpetuals have been among the most favorable products for day traders and short-term speculators. Rising open interest could indicate that more traders are looking for short-term profit, which could bring additional volatility to the market. 

Figure 3: Daily open interest for BTCUSDT Perpetuals on Bybit. Source: Bybit

Dec 27, 2024 remains the most popular expiration date for BTC Options on Bybit, with most of the open interest there. Within that expiration, $120,000 calls had the most OI, and $100,000 calls accumulated the second-largest OI. 

Figure 4: Open interest by strike for BTC Options with a Dec 27, 2024 expiration. Source: Bybit

Meanwhile, the market’s optimism that BTC will hit $100,000 by the end of the year seems to support the current price momentum. Shorter-dated options could show that traders are also looking for downside protection. The Bybit 

 page shows that BTC Options with a Nov 29, 2024 expiration have a strong 24-hour inflow to $90,000 puts. This could indicate that some traders are also anticipating some degree of price correction by the end of the month. 

Figure 5: 24-hour volume by strike for BTC Options with a Nov 29, 2024 expiration on Bybit. Source: Bybit

 for BTC Options on Bybit also indicates a possible downside protection in play among options traders. A smirk skew, or left skew, is a skew curve that’s steeper on one side (the left side) than the other. Traditionally, a smirk skew curve could mean that traders have been protecting their portfolios against a possible declining market. At the time of this writing (Nov 21, 2024), BTC Options contracts on Bybit with Nov 29, 2024 and Dec 27, 2024 expirations have both shown a smirk skew. However, this doesn’t necessarily mean traders are bearish on the price, and could just be part of the trading strategy. For example, traders could set up collars by buying out-of-the-money (OTM) puts and selling OTM calls simultaneously, so that they can profit in case BTC’s price drops, gain upside exposure and potentially offset the cost of buying the puts. 

Figure 6: Implied volatility of BTC Options with Nov 29, 2024 and Dec 27, 2024 expirations. Source: Bybit

The current BTC leverage trading may be complex, but tells a revealing narrative about market sentiment. The divergence between high leverage and increased hedging activities also reminds us that market dynamics are rarely straightforward, and adopting a 

 seems increasingly important in this diverse market.

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Learn From Smart Money: BTC’s Leverage Remains High as Traders Hedge Against Downside Risks

Welcome to Market Chatter, your guide to on-the-ground conversations among Bybit communities in different regions.

We want to take advantage of Bybit’s global network and our regional partners to share market colors based on what our traders and users have been chatting about — and what draws their attention. This week, we look into BTC.

There’s certainly a lot of hype in the crypto community as the 

 reached over $90,000 for the first time. As the bullish sentiment in the market can be seen across the board, our desk shows that the BTC derivatives markets could already be overleveraged at this point without significant changes in the fundamentals.

Crypto has become a major issue during the recent U.S. elections, and president-elect Donald Trump’s campaign has made big promises about crypto, including setting up a 

. Although BTC has the potential to become a treasury asset held by central banks, corporations and institutions, some traders believe that we’re still far away from turning that possibility into a reality. The recent price actions suggest that the market could be moving away from fundamentals and showing a bit 

 has already reached the “Extreme Greed” zone, indicating an increased risk of irrational behavior in the market.

The Crypto Fear & Greed Index has entered the “Extreme Greed” zone. Source: Bybit

, Michael Novogratz, the head of digital investment firm Galaxy Digital, said the odds of a Bitcoin strategic reserve under the Trump administration are low, mostly because the Republicans don’t have majority control in the Senate, which could create friction in the legislative procedure. However, as a result of the 2024 U.S. elections, after January 20, 2024 there will be a Republican majority in the U.S. Senate and, most likely, in the House of Representatives as well.

Some traders have also highlighted that it could be dangerous for retail investors without much crypto experience to enter the market now, as it could be painful if the current leverage unwinds. That’s why we recommend investors

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Market Chatter: Are We Overleveraged?

While some believe that the BTC bull run may last at least until year-end, some ETH derivatives traders may have a different idea.

The positive sentiment around BTC has resonated throughout the border cryptocurrency market as the price of the leading crypto reached another ATH. ETH also benefited from the bullish sentiment as it handily surpassed $3,000, the highest level since August 2024.

, we noted that some options traders on Bybit have been using $2,700 and $3,600 calls with a year-end expiration for this run. Now, the $2,700 calls have already turned significant profit at the current price level.

While some believe that the BTC bull run may last at least until year-end, some ETH derivatives traders may have a different idea. In this edition of Learn From Smart Money, we’ll follow up on the latest ETH derivatives trading data on Bybit and try to unlock the reasoning behind these traders’ strategies.

Renewed Interest in ETH — But Not Overhyped

As of Monday, Nov 11, 2024, the latest bull run has pumped ETH's YTD gains to about 35% (from the 12% previously mentioned). And yet, it's still behind most of the other major cryptos, such as BTC (83%), SOL (86%) and TON (123%). However, it's clear that the public's interest in ETH has rebounded. Google Trends indicates that the term "ETH" has gained interest in its search engine. 

It's considered a good sign that the general interest in a specific crypto asset has increased. What's more encouraging, however, is that interest in ETH remains relatively low compared to previous cycles — which means that the market is still far from being at an irrational level or 

Figure 1: Google search interest in ETH for the past five years. Source: Google Trends

ETH's ETF capital flows may also support the same stance. Data from CoinGlass for the period from Nov 6–8, 2024 shows ETH Spot ETF net inflows of $217.9K, the biggest total since August. Since Spot ETF issuers directly hold the crypto, the capital flow of ETH Spot crypto ETFs is highly correlated with the price, and last week's net inflow aligns with the price actions, just as in August.

Figure 2: Total capital of ETH Spot ETF flows. Source: CoinGlass

Increasing Open Interest From ETH Options and Perpetuals

The strong interest in ETH has also been observed on Bybit, especially in derivatives trading. Bybit's 

 has reached a new monthly high as of Nov 11, 2024, while open interest

 has been hovering near its monthly high.

Open interest is important as data because it tracks the number of active market participants and — to some extent — can reflect the level of willingness of derivatives traders. Besides, a higher level of open interest can also indicate higher liquidity in the market, as liquidity is one of the most important parts of trading. It helps traders enter and exit a trade at the desired price with minimal 

Learn more about the difference between open interest and trade volume 

Figure 3: Open interest and volume of ETH Options on Bybit. Source: Bybit

Figure 4: Open interest and volume of ETHUSDT Perpetuals on Bybit. Source: Bybit

Although macro data suggests that overall interest in ETH has been increasing, the number of holders with short positions on ETH Perpetuals has also slowly been growing. 

Figure 5 (below) shows the daily long/short ratio of ETHUSDT Perpetuals on Bybit. The number of holders with net short position has been increasing since Nov 7, 2024, and has stabilized at around 23% (of the net long account number). 

While not alarming, a continuation of the increase in the net short account number could mean a turnaround of the bullish momentum. Thus, ETH Perp traders should closely monitor the development of this data.

Figure 5: Long/short ratio of ETHUSDT Perpetuals on Bybit. Source: Bybit

Some Options Traders Are More Bullish, Some Maybe Less

Options have been gaining popularity among ETH derivatives traders largely because of their composability and flexibility when it comes to strategy execution. Contracts with a year-end expiration remain ETH speculators' favorite tenor, as contracts with a Dec 27, 2024 expiration have the highest open interest on Bybit.

Figure 6: Open interest of ETH options with a Dec 27, 2024 expiration. Source: Bybit

At the time of this writing (Nov 11, 2024), $3,100 and $3,200 calls — which are already 

 (ITM) — are still sitting with most of the open interest. (“ITM call options" means that the underlying asset's market price is higher than the call option's strike price.) On the other hand, $4,200 calls — which are still out-of-the-money (OTM) — have also received noticeable OI. 

If a trader is bullish on the price of a specific asset within a certain time period, they’ll likely use OTM calls with a specific expiration to speculate on that asset. In ETH's case, ETH bulls are expected to take profit from the $3,100 and $3,200 calls and rotate to calls with higher strike prices to maximize the opportunity. We’ve already seen some of these rotations toward $4,200 calls.

However, if there's no significant open interest increase in ETH calls with higher strike prices in the coming days, it could be a sign that options traders believe that the momentum of the ETH rally may need a break.

Figure 7: Open interest of ETH call options with a Dec 27, 2024 expiration by strike. Source: Bybit

Let’s move on to the puts with year-end expiration. The $2,000 strike price remains the most popular choice among ETH options traders. With the current market momentum, the chance of ETH dropping to $2,000 by the end of the year is unlikely. However, having those puts could be part of a downside protection strategy, such as a 

Learn more about options strategies in the 

Figure 8: Open interest of ETH put options with a Dec 27, 2024 expiration by strike. Source: Bybit

While the crypto market is currently in a state of euphoria, certain macro events should be on the watchlist, including the upcoming U.S. economic data and U.S. Fed Chair Powell's speech after the FOMC meeting. With these developments, the crypto market is expected to get more clarity on the pacing of future rate cuts. 

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Learn From Smart Money: Derivatives Data shows Divided Views on ETH as ETF Recorded Strong Inflows

Data shows that derivatives traders on Bybit have been setting up for short-term market volatility, while things could be relatively stable toward year-end.

 hit a fresh all-time high as traders and investors braced for the outcome of the U.S. elections and the upcoming interest rate decision from the Fed. As our 

 highlighted, the rising odds for a Republican presidency have increased volatility in Treasuries and equities, suggesting significant market implications depending upon election outcomes. Data shows that derivatives traders on Bybit have been setting up for short-term market volatility, while things could be relatively stable toward year-end.

 derivatives traders have been focusing on the upcoming macro events, and the U.S. elections are front and center, dominating news headlines globally. Despite the price of BTC remaining in its multi-month range, data shows that traders have been keen to bet on BTC's potential price movement after the U.S. elections. 

 page indicates that most of the open interest in BTC options was has been on contracts with a Nov 8, 2024 expiration.

Figure 1: Open interest by expiration of BTC options on Bybit. Source: Bybit

Figure 2: Open interest by strike of BTC call options with Nov 8, 2024 expiration on Bybit. Source: Bybit

Among the calls, the $75,000 strike price seems the most popular choice, while $73,000 and $71,000 have also seen notable open interest. This could mean that some traders are betting on the price of BTC soaring above $70,000 or potentially hitting $73,000 right after the U.S. elections.

The picture seems clearer when looking at the puts. With the same expirations, most of the open interest has focused on puts with a $68,000 strike, and puts with a $62,000 strike have also received plenty of attention.

So, how can we interpret this overall? At the time of this writing (Nov 5, 2024), BTC has been trading around $68,700 on Bybit. Calls at a $73,000 strike with a Nov 8, 2024 expiration may be considered aggressive, while $68,000 puts with the same expiration could be considered reasonable downside protection for the election trade. 

Figure 3: Open interest by strike of BTC put options on Bybit. Source: Bybit

It's worth noting that the implied volatility (vols) of short-dated BTC options has been rising rapidly to over 89% (even realized vols went over 40%), which many consider relatively high. Vols is one of the key components when it comes to pricing options contracts. In a nutshell, the higher the vols, the higher the price of the options contracts, and vice versa. Since the vols of short-dated BTC options have surged to a relatively high level, traders may need to pay a premium if they want to use these options contracts to speculate on BTC prices, which may limit the upside.

Figure 4: Implied volatility of BTC options with Nov 8, 2024 and Nov 29, 2024 expirations on Bybit. Source: Bybit

Figure 5: Historical volatility of BTC options on Bybit. Source: Bybit

BTC options trading data on Bybit shows that most open interest on BTC calls with a Nov 29, 2024 expiration has been at a strike price of $75,000 (see Figure 6, below). It seems traders aren’t expecting an imminent bull run by the end of the month. However, since the market is filled with uncertainties, market participants could change their setups anytime.

Figure 6: Open interest by strike of BTC call options with Nov 29, 2024 expiration on Bybit. Source: Bybit

Short-term volatility is almost inevitable in the crypto market amid a series of macro events. Traders are expected to actively make trades shortly after the U.S. presidential election results are confirmed. Also, the market could reassert the pacing of the rate-cut cycle from the Fed’s interest rate decision and the press conference afterward. All these events could cause volatility in the crypto market, especially for BTC. That's why trading derivatives can offer leverage and, at the same time, downside protection — and that's exactly what traders need during a volatile market. Follow Bybit 360 and Bybit Options for more insights.

Disclaimer: Investing in cryptocurrencies and their derivatives involves substantial risk of loss, and isn’t suitable for every investor. This article provides facts for educational purposes only, and does not represent any financial advice. Prior to making any investment decisions, please ensure you fully understand the risks involved and seek independent advice if necessary. Our customer support team is available to assist you with any inquiries.

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Learn From Smart Money: BTC Reaches a Fresh ATH Amid Macro Events, but What’s Next?

BTC and SOL have snapped 60% YTD gains so far, any chance for ETH playing a catch-up?

The sentiment of the broader cryptocurrency market has turned positive as the price of BTC cleared its March 2024 highs. With the current momentum, BTC could be paving the way for reaching a new all-time high. So far, BTC and SOL have snapped 60% YTD gains. However, ETH only gained about 12% in the same period. 

, we emphasized that ETH may need a break before another attempt to push higher. Since the article was published, the price of 

 contract has retracted from around $2,600 to nearly $2,300 before rebounding.

This edition of Learn From Smart Money will continue to dig into the derivatives trading data on Bybit to explore the possibility of ETH catching up to its peers by the end of the year.

Crypto market sentiment has improved noticeably as recent BTC price actions have renewed traders' interest in the asset class. The 

Figure 1: Crypto Fear & Greed Index and the global crypto market cap. Source: Bybit

Derivatives traders' interest in ETH has increased in addition to that for other major tokens, especially in the options market. Figure 2 (below) indicates the open interest and trade volume for ETH options on Bybit, as open interest reached a fresh monthly high (highlighted in the red circle). This could indicate that traders are more willing to use options contracts to speculate on the price of ETH, potentially reinforcing the current momentum or hedging their existing positions using options.

Figure 2: Open interest and volume of ETH options on Bybit. Source: Bybit

Strong momentum has also been seen in the ETH perpetual contracts market, as open interest reached the highest level in almost a month. Although perpetuals, futures and options contracts are widely used by professional traders and institutions, there are some key differences between the three. (Please read the article entitled 

 on Bybit Learn for more information. Also, check out 

 to learn more about trade volume and open interest in derivatives trading, and why these are essential.) 

Figure 3: Open interest and volume of ETHUSDT Perpetuals on Bybit. Source: Bybit

As we dive into ETH options trading data, it’s evident that the ETH options market has gotten more attention, and options traders are setting up for a year-end trade as contracts with a Dec 27, 2024 expiration have the highest open interest. This could mean that traders have been betting on the potential price actions of ETH, and these movements could be realized by the end of the year. It's also worth noting that contracts with a Nov 1, 2024 expiration received the second-highest open interest on Bybit, implying that some traders are also making short-term speculations with options.

Figure 4: Open interest by expiration of ETH options on Bybit. Source: Bybit

Exploring how options traders pick their contract strike prices could provide another clue. According to Bybit's 

 page, among all the ETH calls with a Dec 27, 2024 expiration, most of the open interest has been on contracts with strike prices at $2,700 and $3,600, as shown in Figures 5 and 6 below. 

Figure 5: Open interest by expiration of ETH options on Bybit. Source: Bybit

Figure 6: Open interest by expiration of ETH options on Bybit. Source: Bybit

The implications could be twofold: On the one hand, some traders seem more conservative by just picking $2,700 calls with a year-end expiration. At the time of this writing (Oct 31, 2024), ETH has been trading at around $2,600. In other words, there's a good chance that these calls could eventually turn 

On the other hand, some traders seem more optimistic by selecting $3,600 strike price calls with the same expiration date. If these calls became ITM, it could mean a potential 35% upside on the spot (or even higher with leverage using derivatives).

Figure 7: Open interest by strike of ETH options with a Dec 27, 2024 expiration on Bybit. Source: Bybit

Now, let's look at the puts. Most of the open interest among the year-end expiration ETH options contracts was on puts with a $2,000 strike price. While many may consider $2,000 to be one of the key psychological levels for ETH, the likelihood of reaching that level by the end of the year seems relatively low. This could in fact be part of the hedging strategy from options traders. Visit the 

While the market is embracing upcoming macro events, such as the upcoming elections and job reports in the U.S., and the upcoming Fed meeting in early November, market volatility could soon increase. From an 

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