KEY TAKEAWAYS
- Bybit and Block Scholes have released a new crypto derivatives analytics report following President Trump’s executive order to establish a strategic Bitcoin reserve.
- The crypto market is showing bearish tendencies, with increased demand for short-term protective options amid declining S&P 500 and skepticism around Ethereum and Solana.
- Despite a surge in spot prices post-announcement, funding rates remain stable, indicating balanced demand for long positions.
- Realized volatility for Ethereum options has increased, driven by tariff discussions, while Solana options see a decline in open interest despite its inclusion in the proposed crypto reserve.
Bybit, the second-largest cryptocurrency exchange by trading volume, has released a new crypto derivatives analytics report in collaboration with Block Scholes. This report comes in the wake of President Trump’s executive order to establish a strategic Bitcoin reserve, signed on Thursday.
In the first week of March, the crypto market showed signs of traders processing the news, with a shift towards bearish tendencies. This was accompanied by a declining S&P 500 and growing skepticism surrounding Ethereum (ETH) and Solana (SOL). The report highlights an increase in demand for short-term protective options as investors aim to mitigate risks in the evolving market landscape.
Stable Funding Rates Amid Market Shifts
Following President Trump’s announcement on March 2, the spot prices of the involved cryptocurrencies experienced a surge. However, funding rates for these assets have remained stable, not reaching the extreme levels seen before Trump’s inauguration. This stability suggests a balanced demand for long positions, indicating subdued short interest in the market.
Volatility and Open Interest Trends
The report notes a significant increase in realized volatility for Ethereum options, surpassing options-implied levels. This is attributed to ongoing tariff discussions that have dampened enthusiasm for ETH, leading traders to seek protection through short-term volatility puts, reflecting a cautious market outlook.
Additionally, there has been a decline in open interest for Solana options at the end of February. Despite SOL’s inclusion in the proposed crypto reserve, open interest has not seen a corresponding increase. Most new positions still favor calls, albeit at a slow pace.
For further insights, the full report can be accessed here.
Why This Matters: Impact, Industry Trends & Expert Insights
The recent report by Bybit and Block Scholes highlights the current state of the crypto market amid President Trump’s establishment of a Strategic Bitcoin Reserve. The report indicates a shift towards bearish tendencies and increased demand for short-term protective options as investors seek to mitigate risks.
A recent CoinStats report highlights the significant volatility in the cryptocurrency market, with Bitcoin’s price dropping below $80,000 and a broader market decline. This aligns with the report’s observations of market shifts and investor caution in response to recent developments.
As per insights from a CryptoNinjas report, Ethereum options are experiencing significant volatility, with a put-call ratio of 0.73 indicating risk aversion. This supports the report’s findings of increased demand for short-term protective options as traders navigate the evolving market landscape.
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