Bitcoin Perpetual Swaps Show Stability, While Ethereum Options Set for Short-Term Volatility: Bybit and Block Scholes Report

The latest market analysis from Bybit and Block Scholes offers insights into the performance of Bitcoin and Ethereum options markets as they navigate the end-of-year expirations. According to the report, while Bitcoin’s options market maintained stability during this period, Ethereum's options appear poised for increased short-term volatility.

Bitcoin Market Stability Amid Year-End Expirations

Bitcoin’s perpetual swaps market surprised many by showing stability during the typically volatile year-end expirations. Usually, options nearing their expiration dates lead to significant price fluctuations, but the report indicates that Bitcoin's open interest (OI) remained relatively stable despite these pressures.

Traders seemed to exhibit a cautious yet confident approach, avoiding heavy reliance on perpetual contracts to hedge the delta of expiring options. This lack of aggressive hedging helped maintain a balanced market, preventing the kind of volatility that often accompanies such expirations.

The report highlights that Bitcoin’s OI has remained resilient, with the total open interest currently around $56.6 billion, despite dropping below $60 billion at the start of 2025. While this marks a decline from the high levels seen in December 2024, it’s still significantly higher than early November when it fell below $40 billion.

Interestingly, the implied volatility term structure for Bitcoin options has remained steep, with a projected volatility of 57% over a one-week period. This steepness reflects ongoing uncertainty, yet it suggests that traders are largely staying neutral in their positions. As of now, most of the expired open interest has not been reinvested, leading to a balanced call-put ratio. This indicates a market with limited leverage compared to the beginning of December 2024, pointing to a period of subdued activity in Bitcoin's options market.

Ethereum Options Poised for Short-Term Volatility

Ethereum's options market, on the other hand, presents a different outlook. While the market showed stability through the end of December 2024, there are signs that Ethereum options could experience short-term volatility as we enter the new year.

The implied volatility for Ethereum options briefly dropped before flat-lining in the last week of December. However, this contrasts with the consistent downturn observed in Bitcoin’s options market. Ethereum’s volatility pattern suggests that its market may be preparing for price fluctuations in the near term.

At the beginning of 2025, Ethereum’s options market has seen increased momentum in call options, signaling heightened expectations for potential price movement. Ethereum’s OI currently stands at $25.5 billion, returning to mid-December levels after a brief decline.

Looking Ahead

The report by Bybit and Block Scholes highlights an interesting divergence in the behavior of Bitcoin and Ethereum’s options markets. Bitcoin’s market has proven resilient, with relatively stable open interest and implied volatility, while Ethereum's options market appears primed for short-term volatility. As the market continues to evolve, traders will be keeping a close eye on both cryptocurrencies to see how these dynamics unfold in the coming weeks.

With Bitcoin’s OI holding steady despite market fluctuations and Ethereum’s options indicating a potential uptick in volatility, both markets are shaping up to be critical indicators of broader trends in the cryptocurrency space. As 2025 progresses, the interplay between options expiration, implied volatility, and market sentiment will likely continue to drive significant developments in these major digital assets.