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

Crypto price movements remain heavily influenced by US president Trump’s policies. Recently, several SEC cases against crypto firms were dropped, which is positive for the industry. This was followed by Trump’s announcement to include BTC, ETH, XRP, SOL and ADA in a US strategic crypto reserve. However, ongoing bearish sentiment in risk assets, highlighted by a decline of over 5% in the S&P 500 since its February all-time high, has negatively impacted crypto. 

Consequently, BTC and ETH have experienced heightened volatility, resulting in an inversion of their at-the-money implied volatility term structures, with strong demand for short-term protective puts.

Please check out the report’s highlights.

President Trump’s announcement on Mar 2, 2025 regarding a US crypto reserve to include BTC, ETH, SOL, XRP and ADA led to a sharp rally in their spot prices. However, funding rates for these tokens have remained subdued, compared to previous highs seen before Trump’s inauguration on Jan 20, 2025. Over the past week, long positions have paid a consistently positive rate across all coins, indicating a lack of strong short demand and potentially robust demand for long positions.

The rally in spot prices following Trump’s announcement of a US crypto strategic reserve to include ETH quickly reversed, as his ongoing tariff pledges contributed to bearish sentiment in risk assets. This volatility has pushed realized volatility above options-implied levels to monthly highs, leading to increased demand for short-term options. The term structure of volatility has inverted, with short-term volatility skewing toward puts as traders seek protection against potential downside.

Open interest in Solana (SOL) options declined at the end of February, with over $5M in calls and more than $3M in puts expiring, most of which weren’t rolled into new positions. Despite SOL trading 44% below its January all-time high, the majority of new positions have been in calls. However, this new positioning is disappointingly weak, given SOL's inclusion in the list of tokens for a crypto strategic reserve announced by Trump alongside BTC, ETH, XRP and ADA.

Advanced

block-scholes-x-bybit-report.jpeg

Bybit X Block Scholes crypto derivatives analytics report (Mar 7, 2025): Investors seek protection as strategic reserve news rattles market

Exchange-traded funds (ETFs) linked to cryptocurrencies have seen notable activity, particularly in response to the recent market downturn. 

Market volatility and geopolitical influences

The cryptocurrency market has been marked by extreme price fluctuations in recent weeks, primarily influenced by political events and economic conditions. A notable catalyst has been US president Donald Trump’s aggressive financial policies, including his unexpected announcement of a US crypto strategic reserve. Initially, this announcement led to a surge in prices; however, the market quickly reversed, raising doubts about the effectiveness of government intervention in stabilizing the crypto sector.

Bitcoin, the top cryptocurrency, experienced a significant drop of 28.3% from its all-time high of $109,115, closing February at $78,226. This decline coincided with a heated exchange between Trump and Ukrainian President Zelensky, which unsettled the crypto community amid discussions about potential tariffs and geopolitical stability. The broader crypto market lost over $640 billion in just 25 days, showcasing a direct correlation between traditional stock market movements and cryptocurrency trends.

Investor behavior has been characterized by emotional responses, including fear of missing out (FOMO) and fear, uncertainty and doubt (FUD). These reactions have often led to price movements that contradict prevailing predictions. For example, during Bitcoin’s price decline, many retail traders panicked and sold off their holdings, only to witness a rebound shortly after. Conversely, price surges driven by FOMO frequently result in subsequent corrections, allowing larger investors (or 

Social media trends indicate a shift in trader sentiment, with discussions around high price targets for Bitcoin suggesting a market top, while talk of lower price expectations may signal a bottom. Recent data reveals a decline in discussions related to speculative investments, indicating a growing caution among retail investors. This shift toward stablecoins and Layer 1 tokens reflects a healthy level of fear that could potentially set the stage for bullish momentum in the future.

The role of ETFs and institutional interest

 (ETFs) linked to cryptocurrencies have seen notable activity, particularly in response to the recent market downturn. Significant outflows from crypto-backed ETFs occurred as investors reacted to declining asset values, resulting in heightened trading volumes. The interplay between ETF movements and underlying crypto assets continues to be crucial for assessing market health and investor confidence.

Despite the current volatility, institutional interest in digital assets remains strong, as indicated by Bitcoin's network growth and ETF trading volumes. This ongoing institutional engagement may provide a stabilizing effect on prices over time. Historically, periods of extreme pessimism in the market have preceded major bull runs, suggesting that traders could soon shift from panic to accumulation.

In conclusion, while the cryptocurrency market faces immediate challenges, the long-term outlook may be more optimistic. If key macroeconomic conditions improve and institutional buying increases, Bitcoin could potentially rise above the $100,000 mark by the end of 2025. For now, traders must navigate the volatility wisely to position themselves for future rewards.

Intro to Santiment.png

Bybit x Santiment: Crypto strategic reserve unnerves market; investors turn cautious

A crypto strategic reserve is essentially a state-sanctioned reserve of Bitcoin or other digital assets designed to function similarly to the gold reserves held by governments.

Over the past year, cryptocurrencies have gained more acceptance and legitimacy in the eyes of government officials and politicians. One positive result of this development is the concept of a Bitcoin and crypto strategic reserve, which aims to create a state-backed store of value similar to the more traditionally held gold reserves.

In this article, we’ll explore what a Bitcoin and crypto strategic reserve is, Trump’s executive order establishing the strategic reserve and the broader political and market implications of such a move.

Trump's signs executive order for US crypto strategic reserve

In August 2024, then-presidential candidate Donald Trump publicly supported the idea of a US Bitcoin reserve during his campaign, arguing that a state-backed digital asset would not only boost national prestige but also provide a critical counterbalance in an increasingly digital financial ecosystem.

On Mar 2, 2025, President Trump announced a broader 

 that would extend the idea to other major cryptocurrencies, such as ETH, SOL, XRP and ADA.

 an executive order (EO) to establish a “Strategic Bitcoin Reserve and a U.S. Digital Asset Stockpile.” Both the reserve and stockpile would contain BTC and other digital assets held by the Department of Treasury that were seized from criminal proceedings. However, the EO also mentioned the possibilities of developing “budget-neutral strategies for acquiring additional bitcoin” without using public funds.

The initial market reaction to the Mar 2 announcement was positive. All of the coins mentioned in the reserve saw significant buying and short covering, which led to double-digit gains across the board. For example, BTC was up 12%, ETH gained 16%, SOL rallied by 28% and XRP saw a major 35% gain. ADA was the biggest gainer, rallying as high as 72% following the announcement. 

While immediate reactions were positive, there were also several prominent figures, even within the crypto community, who questioned the inclusion of other assets — apart from Bitcoin — into initiatives for the strategic crypto reserve.

However, following Trump’s executive order to establish the strategic reserve on Mar 7, BTC 

 by around 5.7%, as market participants were left underwhelmed. Despite David Sacks, Trump’s crypto and AI tsar, calling the reserve a “digital Fort Knox,” investors were disappointed that this signalled no additional purchases of Bitcoin or other digital assets.

A Bitcoin strategic reserve is essentially a state-sanctioned reserve of Bitcoin designed to function similarly to the gold reserves traditionally held by governments. It's a common practice of governments to hold gold as a reserve to protect their national currencies in case of an emergency. Gold often forms a large share of forex reserves for most countries. The table below shows the top 10 nations holding gold reserves as of Feb 7, 2025.

Since Bitcoin has largely gained acceptance as 

, the idea behind a Bitcoin strategic reserve is to create a decentralized, secure vault system whereby Bitcoin is stored and managed by federal governments. By allocating a portion of national reserves to Bitcoin, governments could theoretically strengthen their balance sheets and diversify away from fiat currencies that are vulnerable to inflationary pressures.

Proponents of such a move argue that Bitcoin’s finite supply and decentralized nature makes it an effective store of value. Its global acceptance and increasing institutional interest lend further credibility to this idea.

In July 2024, US Senator Cynthia Lummis introduced the “Boosting Innovation, Technology and Competitiveness through Optimized Investment Nationwide” 

. It’s a legislative proposal aimed at establishing a strategic Bitcoin reserve in the United States. The press release from Senator Lummis’s office outlines several critical components of the bill, as follows:

What does the strategic reserve mean for the future of Bitcoin?

The idea of a Bitcoin strategic reserve is innovative, and aims to use Bitcoin to improve the balance sheet of nation states. This could be a win-win, as Bitcoin would benefit from increased legitimacy while nation states would be holding an asset that potentially provides better returns than those of gold. 

While there will be no immediate acquisition of Bitcoin from the US government, the reserve implies that there will be no selling pressure from the roughly 200,000 BTC (almost $17.4 billion) held by the US government. However, it remains to be seen if other strategies to acquire additional BTC without incurring cost to US taxpayers will be implemented.

Beginner

crypto strategic reserve.png

Crypto Strategic Reserve: The BITCOIN Act and beyond

This is a guest post written by TheBlockchain Today, a crypto analyst and writer, founder of Whaleportal and host of The Blockchain Today YouTube channel.

This is a guest post by TheBlockchain Today, a crypto analyst & writer, founder of Whaleportal and host of The Blockchain Today. Find more of his educational videos at The Blockchain Today's YouTube channel (@TheBlockchainToday). 

Introduction: Why sentiment is a key factor in trading

Price movements aren’t just about indicators like the RSI, MACD, or candle stick patterns, they’re also driven by human emotion. When traders become extremely optimistic, they tend to buy aggressively, often pushing prices higher in a short period. However, once this excitement fades, the market frequently corrects. Similarly, on the other extreme, when fear takes over and sentiment turns extremely negative, most short-term traders are sidelined. They are too scared to enter the markets. Ironically, this is often when markets start recovering. There is a very simple market mechanic at work here — when traders are afraid they sell, leaving more money on the sidelines to potentially enter the markets again. When traders are too optimistic, most money has been positioned, leaving the market with more potential sellers. 

By understanding these emotional cycles, traders can avoid reacting on emotions like FOMO (fear of missing out) and panic selling, leading to better decision-making. Instead of reacting in an emotional way to the markets, traders try to understand the sentiment and use it to their advantage. 

The market sentiment is essentially the collective mood of traders at any given time. This mood is shaped by a variety of factors, including news, price action and social media. Here’s how it typically plays out:

This cycle repeats itself over and over again in different timeframes. Recognising it early can prevent traders from buying the top or selling the bottom. Let’s have a look at the fear and greed indicator. 

In the chart above you can see the BTCUSDT chart with the Crypto fear and Greed Indicator.  Generally when the sentiment is overly negative, price tends to go up and when the sentiment becomes overly positive, price needs to cool down. 

How to identify short-term sentiment shifts

While long-term sentiment indicators like the 

 provide a broad market outlook, short-term sentiment can be very useful too. Here are some of the best ways to spot sentiment shifts in real time:

A quick way to assess sentiment is by analyzing content on 

Twitter, YouTube and crypto news platforms

How Bybit traders can use sentiment to stay rational

Sentiment should never be the sole factor in making trading decisions, but it can serve as a confirmation tool. Here’s how Bybit traders can use it to their advantage:

The sentiment is often overlooked by traders. However, it is still an important metric to include in one's analysis, not just to get better entries and exits but to avoid mistakes. It can give traders a clear edge as many market participants are often stuck in the emotional state of the markets.

This article does not provide financial advice in any way, shape, or form. It is intended solely for educational purposes and should not be construed as a recommendation to buy, sell, or invest in any financial products or services. 

The information presented is for general knowledge only and does not account for individual circumstances, risk tolerance, or financial goals. Always conduct your own research and due diligence. 

TheBlockchain Today.png

The Role of Short-term Sentiment in Trading

Glossary

Do you find crypto terms hard to understand? If your answer is yes, then this series is for you. Crypto Terminology: A to Z  helps you decipher

Cryptocurrencies have revolutionized the financial world, offering a decentralized, secure, and often volatile market for investors and enthusiasts. Among the many concepts essential to understanding this digital economy, three stand out: Halving, Hard Fork, and Hash Rate. This comprehensive guide delves into each of these topics, providing insights into their implications in the cryptocurrency world.

Halving refers to the reduction in the reward that miners receive for adding new blocks to a cryptocurrency's 

. This event, occurring at predetermined intervals, significantly impacts the supply of the cryptocurrency, often leading to price fluctuations.

Hard Forks: Pathways to Evolution and Division

 in the context of blockchain technology represents a significant change to the network's protocol. It often leads to the creation of a new blockchain branch, resulting in two separate paths: the original and the new fork.

Hash Rate measures the computational power per second used in mining and processing transactions on a blockchain network. It's a vital indicator of the network's health and security.

Exploring the Interplay of Halving, Hard Forks, and Hash Rate

These three concepts are interconnected, each playing a role in the broader landscape of cryptocurrency.

Tables and Lists to Simplify Complex Concepts

Table: Comparative Analysis of Pre and Post-Halving Effects

List: Key Takeaways from Major Hard Forks

Understanding halving, hard forks, and hash rate is crucial for anyone involved in the cryptocurrency space. These elements not only define the technical workings of various cryptocurrencies but also significantly influence market dynamics and investment strategies. By keeping an eye on these factors, investors and enthusiasts can better navigate the complex and exciting world of digital currencies.

Halving, Hard Fork, and Hash Rate

Grab Up to 5,000 USDT in Rewards

Grab Up to 5,000 USDT in Rewards