The start of the week presented a tumultuous landscape for the financial markets, characterized by pronounced drops in key stock indices and cryptocurrency values. This volatility coincided with the unveiling of DeepSeek’s artificial intelligence (AI) model, which seemed to shake investor confidence. Although there was a notable sell-off, open interest levels for perpetual swaps involving Bitcoin and other significant cryptocurrencies remained resilient. Interestingly, while funding rates experienced a brief dip into negative territory, they recovered quickly, indicating some underlying stability.
Despite fluctuations in the broader market, the options trading environment displayed a unique resilience, with heightened activity being reported. A comprehensive analysis by crypto exchange Bybit and the research firm Block Scholes revealed that Ethereum options appear more robust compared to those of Bitcoin following this risk-off scenario. Specifically, Ethereum options have been trading at a volatility premium, suggesting heightened investor optimism about ETH’s potential movements compared to BTC.
Over the past month, Ethereum options trading volumes have been vibrant, displaying levels similar to those observed following the end-of-year trading frenzy in late December 2024 and early January 2025. The latest data illustrates a decisive trend toward call options, signaling bullish sentiment among traders. A temporary retreat in placing call options during the market sell-off did not deter the ongoing activity in Ethereum options, which has continued to outpace that of Bitcoin in terms of volatility.
Despite the optimism in Ethereum’s options market, the ether (ETH) spot price itself has not mirrored Bitcoin’s strength, lagging behind in performance. This disparity emphasizes a divergence between options perceptions and actual spot price movements, a critical observation for traders and investors looking to assess market sentiment accurately. Furthermore, the derivatives market for Solana has also demonstrated notable interest, with open interest levels in both puts and calls gathering momentum—even surpassing previous benchmarks set during rally periods driven by surprising political tokens just launched on the network.
Bybit and Block Scholes noted that the consistent influx of put options on the Solana network could imply that investors are strategically positioning themselves to hedge long-term profitable bets across different trading assets. Meanwhile, Bitcoin’s options market has largely remained static over the week, apart from some changes tied to the expiration and reopening of short-dated contracts.
Short-term options trades are manifesting reduced volatility, establishing a neutral skew, while longer-dated trades are revealing heightened volatility expectations and a consistently bullish inclination towards out-of-the-money calls. This phenomenon has persisted throughout the post-election period, signaling sustained interest among investors in anticipating future price movements.
Interestingly, the Bitcoin options market achieved a notable milestone recently, recording its highest single-day trading volume for call options this month, amounting to $250 million amid the decline in its spot price. Despite this activity, both realized and implied volatility measures have shown a downward trend since then, suggesting a cautious outlook among traders.
While the financial landscape appears fraught with uncertainty, the options markets for cryptocurrencies, particularly Ethereum and Solana, exhibit varying degrees of resilience and opportunity. Stakeholders must navigate these complexities with an understanding of the intricate dynamics at play.
