The cryptocurrency options market is showing signs of recovery after a sharp sell-off earlier this week, according to the latest report from Bybit and Block Scholes.
The downturn, triggered by DeepSeek’s LLM announcement, caused significant declines across major indices and crypto markets. However, trading activity remained strong, even as volatility expectations continued to fall.
Bitcoin options experienced their highest single-day trading volume this month, reaching nearly $250 million as BTC’s spot price fell. Despite this surge in activity, both realized and implied volatility declined. Short-term options exhibited lower volatility with a neutral skew, while longer-dated contracts continued to show a bullish bias toward out-of-the-money calls, a trend that has persisted since the election.
Ethereum options also saw a surge in trading, reaching their highest levels in a month, with open interest heavily favoring calls. Although the broader sell-off briefly impacted short-term ETH volatility, its options market remained resilient. ETH continued to trade at higher volatility levels than BTC, reflecting investor confidence, even as its spot price recovery lagged behind Bitcoin’s.
Solana initially surged following the launch of two presidential meme coins but later retraced in line with the broader market downturn. Open interest in both puts and calls remained elevated, with trading volumes exceeding pre-rally levels. The continued addition of put options suggests traders are hedging against potential losses in long positions.
This report follows the inauguration of Donald Trump, which saw the crypto market react with restrained enthusiasm. Despite speculation about crypto-friendly policies, no major announcements materialized. However, the launch of TRUMP and MELANIA meme coins briefly energized derivative markets, fueling bullish sentiment. Solana emerged as a key player, with the TRUMP meme coin driving increased activity on its network, boosting fee generation and momentarily surpassing Ethereum in significance. Still, the overall market impact remained limited. Although front-end volatility has since normalized, the market continues to favor out-of-the-money call options, underscoring ongoing bullish sentiment among some traders.
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