Bybit x Block Scholes Derivatives Report: ETH Outpaces BTC Amid Market Shifts

Dubai — A new derivatives report from Bybit, in collaboration with Block Scholes, sheds light on shifting trends in cryptocurrency markets. Despite a dip in Ethereum (ETH) perpetual positions, Ethereum continues to lead Bitcoin (BTC) in options open interest, with analysts attributing the fluctuation to recent price pullbacks.

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Following Bitcoin’s retreat from the $100K level and Ethereum’s dip below $4K, ETH’s open interest in derivatives markets has seen a decline. While investor sentiment remains upbeat, this has been tempered by less aggressive positioning, as evidenced by a drop in funding rates.

The report, which benchmarks data against pre-U.S. election levels, also takes a closer look at trends in futures, perpetuals, and options markets.

Key Insights

1. ETH Perpetuals Yield to BTC: Ethereum's perpetual open interest has dropped significantly, driven by the liquidation of overleveraged long positions. In contrast, Bitcoin’s perpetual activity has remained steady throughout December, with a brief spike following BTC’s surge past $100K last week.

2. Funding Rates: A Market Reset: Funding rates have returned to a more neutral 0.01% after a wave of liquidation. The unwinding of leveraged long positions has led to a more cautious market environment, with funding rates reflecting a recalibrated stance. While the overall sentiment has cooled, it’s not yet overly bearish post-sell-off.

3. ETH Continues to Outperform BTC in Options: Ethereum’s options market remains strong, with open interest maintaining a bullish outlook as the year-end expiration approaches. However, recent spot price movements have led to a decline in trading volumes. Interestingly, ETH’s options market displays an inverted term structure, compared to BTC’s flat curve, due to realized volatility exceeding forward-looking projections.

Full Report Access

For an in-depth analysis of these trends, including insights on spot trading, futures, options, and perpetual contracts, access the full report here.