Derivatives Sentiment Turns Positive as Bitcoin Hits Two-Month High
Bybit and Block Scholes report shows derivatives sentiment improved as Bitcoin (BTC) rallied into the upper $90,000s, reaching about $97,000 and prompting a rise in funding rates and futures open interest. Open interest across nine major coins climbed above $8 billion, returning to levels seen earlier in the year. Bybit’s Risk-Appetite Index rose, indicating traders added perpetual positions to capture further spot gains. Altcoin spot ETF inflows (including ETH, SOL and XRP ETFs) supported the move. Short-dated implied volatility for BTC options remained low (~22% over 12 months) and ATM volatility was largely unchanged despite a late realized volatility spike. Markets show greater willingness for leveraged exposure: short-tenor volatility smiles have moved toward a neutral skew from bearish, and seven-day futures traded at roughly a 10% premium to spot. Analysts warn that BTC must hold around $95,000 to sustain the shift from bearish to neutral; failure to do so historically flips short-dated skew back toward put premiums. Key keywords: Bitcoin, derivatives, open interest, funding rates, options volatility, perpetuals, ETFs.
Bullish
The report signals a constructive shift in derivatives positioning that supports further upside. Key bullish indicators: rising open interest (> $8B across nine major coins), higher funding rates, Bybit’s Risk-Appetite Index uptick, sustained ETF inflows into ETH/SOL/XRP, and short-tenor option skew moving from bearish to neutral. These show traders are willing to add leveraged long exposure via perpetuals and futures — typical behavior during breakout phases. Short-term, this increases the probability of continued momentum while also elevating liquidation risk if price reverses. Historically, similar rises in OI and funding during BTC breakouts have amplified rallies but also led to sharp pullbacks when BTC failed to hold key levels. The caveat: options volatility remains relatively low (~22% short-dated IV), so the market could swiftly flip bearish if BTC falls below the $95,000 support; short-dated skew would likely return to put premiums, increasing downside protection costs and signaling risk-off. For traders: favor momentum-aligned long strategies with tight risk controls, monitor funding rates and OI for overheating, and watch BTC’s ability to hold $95k as the critical short-term pivot.