Bybit / Block Scholes: Derivatives Signal Cautious Stability as Bitcoin Hits 15‑Month Low
Bybit and Block Scholes released a joint derivatives analytics report after Bitcoin slid to a 15-month low, finding that derivatives markets show cautious stability despite heavy spot losses. Key findings: about $500bn of total crypto market cap was wiped since late January; Bitcoin fell roughly 40% from a $126,000 peak and briefly dipped below $70,000; liquidations surged and open interest in BTC perpetual futures fell from ~$5bn to $3.6bn, indicating reduced leverage. Options demand has shifted to short-dated protection, but implied volatility (~50% for short/mid-dated contracts) remains below realized volatility and far lower than 2022 bear-market spikes. Put-call skew and downside premiums have risen but are well short of prior extremes, resembling the 2021 mid-cycle correction more than a sustained bear market. Bybit analyst Han Tan noted bears capitalised on catalysts to pressure prices and that sentiment is risk-off despite strong equities and metals. The report concludes derivatives pricing suggests traders expect limited prolonged turbulence rather than a deep, long-lasting crypto winter. The full Bybit x Block Scholes report is available for download.
Neutral
The report describes a large spot price correction and significant liquidations — short-term bearish signals — but finds that derivatives markets (futures open interest, implied volatility, and put-call skew) show reduced leverage and muted fear compared with historical bear markets. Implied volatility near 50% and a sub‑one implied/realized volatility ratio indicate traders are not pricing in a protracted crisis. This suggests limited short-term downside risk from forced liquidations has already been partly absorbed, making a deep capitulation less likely immediately. Short-term impact: elevated volatility and tactical bearish trading (shorts, protective puts), higher liquidation risk around key supports (e.g., $69–70k). Options desks may demand continued short-dated protection, keeping premium levels above normal. Long-term impact: because derivatives pricing resembles mid-cycle corrections (2021) rather than 2022 extremes, the market may stabilize and recover if macro catalysts or on-chain fundamentals improve. However, persistent negative sentiment and absence of clear catalysts could prolong consolidation. Overall, derivatives indicate cautious stability — not a clear bullish reversal nor a confirmed prolonged bear market — so traders should manage leverage, watch open interest and IV term structure, and use options to hedge directional risk.