Bybit & Block Scholes: No Year‑End ‘Santa Rally’ Seen in Crypto
Bybit and analytics partner Block Scholes released a Crypto Derivatives Analytics Report on Dec. 19, 2025, concluding there is little evidence of a year‑end “Santa rally” in crypto markets. The report notes persistently bearish sentiment despite a recent U.S. rate-cut cycle and weaker labor data (U.S. unemployment at 4.6%). Key findings: perpetuals open interest is largely unchanged, signaling low participation; Bitcoin funding rates remain mostly positive while altcoin funding is more volatile; options show a pronounced skew toward out‑of‑the‑money put buying for both BTC and ETH across tenors, pricing in downside risk; short‑dated volatility eased from earlier extremes but the term structure of implied volatility remains elevated. Bybit’s chief market analyst Han Tan summarized that crypto is “rudderless” and likely to end the year quietly rather than with a strong rally. The report implies continued trader caution, elevated demand for downside protection, and muted leverage usage — factors that may limit upside momentum going into the new year.
Neutral
The report highlights subdued participation (flat open interest), persistent demand for downside protection (put skew in BTC and ETH options), and limited leverage — all signs of trader caution rather than active bearish liquidation. Bitcoin funding rates being mostly positive is a mildly bullish micro-signal, but the overall derivatives structure (volatility term structure elevated, put skew) and weak price action point to limited upside. Historically, similar conditions (low open interest + put-heavy options skew) precede rangebound markets or gradual declines rather than sudden crashes or rallies. Short term: expect low liquidity, muted volatility spikes, and limited trend-following opportunities; traders may favor hedged positions, option protection, and reduced leverage. Long term: if macro easing continues and risk appetite returns, these indicators can reverse and fuel rallies, but current data suggest a cautious re-entry is more likely than an immediate Santa‑rally.