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The crypto market has become far less volatile in recent years, with Deribit’s Sidrah Fariq citing BTC DVOL remaining below 100 since 2022 as evidence of market maturation and a growing shift toward options and derivatives.
Institutional Influx Drives Volatility Down
The crypto market has become significantly less volatile compared to a few years ago. Bitcoin’s surge since the spot exchange-traded funds (ETF) approvals in January 2024 has been a significant factor, with only a few altcoins following suit and establishing new all-time highs. Some experts assert that there’s been a notable shift towards related financial contracts, particularly options and derivatives.
According to Sidrah Fariq, Head of Retail Sales at Deribit, this volatility drop and market maturation can be evidenced by Deribit’s BTC DVOL (implied volatility index), which has remained below 100 since 2022, even with bitcoin achieving new all-time highs. Fariq attributes the shift towards options and derivatives, as well as decreased volatility, to the arrival of institutional investors following the approval of spot bitcoin ETFs in January 2024.
To cope with these changes, centralized cryptocurrency exchanges have since adapted to this new landscape, diversifying their offerings to include a wider range of trading and investment options. This expansion aims to cater to the evolving needs of investors and traders, providing them with more opportunities to engage with the crypto market.
“ Bitcoin’s surge and the January 2024 ETF approvals brought in broader institutional adoption by enabling institutions to gain Bitcoin exposure through regulated investment vehicles and traditional brokerage firms such as BlackRock,” Fariq said.
In the last three years, Deribit, which was acquired by Coinbase this year, has seen the institutional share of business grow from 80% to 85%, which Fariq cites as evidence of growing institutional demand and increasing market sophistication. Despite this notable shift, crypto options still make up only about 2.8% of the overall derivatives space, with Deribit holding around 85% market share on open interest.
Read more: Coinbase Finalizes Deribit Acquisition to Lead Global Crypto Derivatives Market
Education and Incentives for New Users
Fariq and Augustine Fan, Partner and CFO at Signalplus, both assert that the crypto options market is still in its very early stages compared to traditional markets, despite recent growth. To highlight this point, Fan points to the huge disparity between options and futures volume.
“Crypto options are still in the very early stages compared to futures, and can be proxied with their traded volumes vs futures across crypto and say traditional equities. Equity option volumes are now at par or even surpassed linear futures depending on which market you are looking at, versus crypto options being in low single-digit make-up (1-3%) vs futures volume as measured on CEX,” Fan stated.
However, Fan and Fariq, citing record options activity coinciding with major market moves as a positive sign, both project that there is tremendous growth potential ahead.
To prepare for this expected surge in demand for options, Deribit is running initiatives aimed at bringing new users to its platform and the world of derivative trading. One such initiative is a trading competition with a $450,000 USDC prize pool that it is running with Signalplus. The objective of the competition is to equip beginners with the right tools, education, and incentives to learn options trading.
Concerning regulation, both experts agree that this is evolving to align with traditional finance (TradFi) standards to facilitate institutional participation. Fariq added:
“They [institutions] must be comfortable with custody, client onboarding rules, money transfers, capital requirements, audits, and security across the ecosystem.”
Both acknowledge progress is being made globally towards this, citing frameworks like Markets in Crypto-Assets (MiCA) in the European Union, the GENIUS Act in the U.S., and the Travel Rule. However, while existential fear of crypto being shut down by regulators has dissipated, Fariq and Fan told Bitcoin.com News that the lack of regulatory clarity remains a key limiting factor for institutional participation.
Turning to the future, Fan said he foresees crypto options becoming a dominant driving factor and trading instrument for both retail and institutional accounts. He also asserts that crypto options can potentially become an important tool for serious investors.
“We expect to see listed options available for all the major tokens available at the time (whatever they are), along with a deep and liquid volatility curve staffed by a high number of automated market makers across the globe,” the Signalplus CFO said.
FAQ 💡
- Why is crypto volatility lower now? Market volatility has dropped as institutional inflows and ETF‑driven Bitcoin demand stabilize price swings across regions.
- What’s driving the rise in crypto options globally? Experts say institutional adoption and maturing markets are pushing traders worldwide toward options and derivatives.
- How are exchanges adapting in different markets? Centralized platforms are expanding product suites—especially options, futures, and structured products—to meet regional investor demand.
- What regulatory trends matter for international traders? Frameworks like MiCA in the EU, the GENIUS Act in the U.S., and global Travel Rule alignment are shaping clearer rules for institutional participation.