KEY TAKEAWAYS
- Bybit’s latest report with Block Scholes highlights a bearish sentiment in crypto markets, with no signs of a year-end recovery.
- Despite easing U.S. monetary policy, Bitcoin and Ether remain under pressure, trading below their 2025 highs.
- Options markets indicate sustained demand for downside protection, reflecting ongoing caution in the crypto space.
Bybit, the world’s second-largest cryptocurrency exchange by trading volume, has released its latest Crypto Derivatives Analytics Report in collaboration with Block Scholes. The report highlights a persistently bearish sentiment across digital asset markets, with little evidence of a year-end recovery rally.
The analysis reviews recent developments in both spot and derivatives markets against a backdrop of easing U.S. monetary policy and weakening labor data. Despite the Federal Reserve delivering a third consecutive interest rate cut earlier in December and U.S. unemployment rising to 4.6 percent, crypto markets have remained under pressure. Bitcoin and Ether continue to trade well below their 2025 highs, with recovery attempts proving short-lived.
Perpetuals and Options Markets Show Limited Recovery
Open interest across major tokens has remained largely unchanged, signaling subdued participation and limited position-taking. Bitcoin funding rates have stayed mostly positive, contrasting with broader measures of weak sentiment. In contrast, altcoin funding rates have been more volatile, reflecting sharper price swings and higher uncertainty.
Options markets continue to price in downside risk. Volatility smiles across Bitcoin and Ether maintain a consistent skew toward out-of-the-money put options at all tenors, indicating sustained demand for downside protection. Although short-dated volatility expectations have eased from earlier extremes, the overall term structure remains elevated, suggesting caution extending into the new year.
Market Analyst Insights
Han Tan, Chief Market Analyst at Bybit Learn, commented on the current state of the cryptocurrency markets. He noted that cryptocurrencies remain largely rudderless, drawing little motivation from the highest U.S. jobless rate since 2021 and the slowest core CPI growth in four years. Tan suggested that the tepid responses to recent macro events, coupled with listless signals from the crypto derivatives space, indicate that digital assets are set to end the year quietly, contrasting sharply with the enthusiasm seen at the start of 2025.
For more detailed insights, the full report can be accessed here.
Why This Matters: Impact, Industry Trends & Expert Insights
Bybit and Block Scholes have released a report indicating no signs of a year-end ‘Santa Rally’ in the crypto markets, despite easing U.S. monetary policy and rising unemployment.
A recent Binance report highlights that macroeconomic pressures continue to weigh on the cryptocurrency market, with the Federal Reserve’s rate cuts not significantly boosting crypto asset prices. This aligns with the report’s findings of subdued market activity and limited recovery in the derivatives markets.
A Finance Magnates report highlights expert opinions on the current state of the crypto market, noting elevated near-term volatility and downside risk. This supports the report’s conclusion that digital assets are likely to end the year quietly, with little motivation from recent macroeconomic events.
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