Global cryptocurrency exchange Bybit (ranked #2 by trading volume) and analytics firm Block Scholes have released a joint derivatives market report revealing unprecedented bearish signals in Bitcoin options markets. The findings coincide with macroeconomic turbulence triggered by new tariff policies.
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Key Findings
Tariff-Induced Volatility Suppresses Bitcoin Open Interest
- BTC and ETH failed to sustain March 2024 highs, mirroring broad market declines
- "Liberation Day" market disruptions accelerated the downturn
Funding Rates Fluctuate Near Neutral
- Brief positive funding rate trends reversed amid trade policy uncertainty
- Perpetual swap markets show indecision between bullish/bearish forces
Put Option Demand Exceeds 2023 Banking Crisis Levels
- Defensive strategies surged after BTC dropped to $75,000
- Put/call ratio skew indicates stronger pessimism than during Q1 2023
- Inverted volatility curves persist despite partial recovery
Market Implications
The 90-day tariff moratorium temporarily stabilized markets, but analysts warn of lingering risks:
- IV Crush Potential: Short-term implied volatility may overshoot fundamentals
- Institutional Activity: Hedge funds increasingly use OTM puts for portfolio protection
- Liquidity Dynamics: Options market depth affects spot price stability
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FAQ
Q: How do tariff policies affect crypto markets?
A: Trade restrictions impact risk assets by reducing liquidity and increasing hedging demand, as seen in BTC's correlation with traditional markets during the announcement.
Q: What does the put/call ratio indicate?
A: Current 0.78 ratio (vs. 0.62 in 2023 crisis) shows stronger bearish sentiment, with traders paying higher premiums for downside protection.
Q: Are funding rates predictive of price movements?
A: Neutral funding suggests balanced perpetual swap markets, but sudden shifts often precede volatility spikes when leveraged positions unwind.
Conclusion
This report highlights crypto derivatives' growing sophistication as:
- A macroeconomic barometer
- An institutional risk management tool
- A liquidity indicator for spot markets
Despite short-term pressures, the 90-day policy buffer allows market participants to reposition strategies. Continued monitoring of options flows and open interest changes remains critical.
Source: Bybit and Block Scholes Crypto Derivatives Weekly Report
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