Bybit has released its latest crypto derivatives report in collaboration with Block Scholes, highlighting a six-day streak of gains in risk-on assets, primarily driven by positive signals surrounding potential US trade deals.
This newfound market confidence, however, is tempered by persistent volatility, with traders remaining cautious as they continue to navigate this shifting landscape.
The report reveals that Bitcoin’s volatility has dropped to its lowest point in 18 months, now settling within a key support range of 35% to 40%. This decline in volatility is mirrored by a corresponding drop in realized volatility, which has fallen to just above 30%, marking the lower end of its 18-month range. Despite these relatively favourable conditions, traders are maintaining a conservative approach, as evidenced by the dominance of put options in the options market, while the spot price remains stable.
Following an impressive surge from $75,000 to over $95,000 in early April, Bitcoin’s price has since steadied, fluctuating around $94,000. Meanwhile, open interest in perpetual futures remains strong, holding near record highs of $8 billion. However, daily trade volumes have dipped to $10 billion, a decrease that coincides with the reduced volatility, indicating that traders are reluctant to make significant moves and are likely waiting for clearer market signals before committing to new positions.
While Bitcoin remains relatively stable, there has been a noticeable shift in its volatility smile, now favouring out-of-the-money (OTM) calls, marking a reversal from the put-heavy sentiment that prevailed in April. This cautious optimism is also reflected in the Ether (ETH) market, where positive funding rates and a slight uptick in the spot price suggest short-term recovery. Nevertheless, longer-dated options for ETH continue to lean bearish, with a preference for puts, highlighting mixed sentiment among traders.
The report further references its previous findings, noting that Bitcoin experienced a sharp rebound last week, buoyed by optimistic comments surrounding US-China trade talks. According to the previous report, this upbeat tone on trade negotiations between China and the U.S. triggered a rally across both crypto and traditional equity markets, reinforcing the intertwined relationship between macroeconomic developments and cryptocurrency price movements.
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