Block Scholes and Bybit Report Highlights Stability in Crypto Derivatives 

A recent study by Block Scholes and Bybit reveals a resilient crypto derivatives market, despite recent market turbulence. The report provides insights into futures, options, and perpetual contracts, emphasizing the sector’s ability to withstand significant market events.

Futures Market Stability Highlighted in New Report Despite Bitcoin Sell-Off

The joint report from Block Scholes and Bybit highlights the stability of futures markets amidst a sharp sell-off that drove bitcoin (BTC) below $59,000. Despite this, open interest in futures markets remained steady, suggesting that traders had reduced their leveraged positions, thereby limiting the risk of forced liquidations. The report notes that this pattern has been consistent throughout the year, reflecting a cautious approach by market participants during periods of heightened volatility.

Source: Block Scholes and Bybit report.

Additionally, the report underscores the positive shift in the toncoin (TON) funding rate following significant market events, further signaling renewed interest in leveraged positions. The report also sheds light on the market’s outlook regarding the upcoming U.S. presidential election. According to the analysis, the volatility term structure indicates a strong bullish sentiment for out-of-the-money calls on post-election expirations.

The report states:

The term structure of volatility holds a very similar shape to before Chair Powell’s Jackson Hole speech… Smiles for expiries after the election retain a much stronger bullish skew towards OTM calls, while short-dated smiles show a demand for downside protection.

This insinuates that traders anticipate a favorable environment for crypto assets following the election. Additionally, the report’s observation of continued demand for downside protection in short-dated expirations reflects cautious optimism in the market. The findings from the Block Scholes and Bybit study suggest a maturing crypto derivatives market that adapts swiftly to shifting dynamics. The consistent stability observed, even amid significant events, points to a growing confidence among traders.