ETH Surpasses BTC Leading in Options Open Interest Study

• ETH perpetual positions are declining as the market falls.
• BTC exceeds ETH in perpetual, but ETH wins in options.

There appears to be a shift of the derivatives tide as of now by Bybit, having known itself as the biggest cryptocurrency trading exchange in volumes worldwide has now partnered and published derivatives analytics with Blocks Scholes. This will signify that at least for eternity, ETH perpetual trades have never gone up below their peaks while BTC currently dominates all forms of perps open interest and its activity level.

Both BTC and ETH have retraced in the past week, seeing BTC backing off from levels around $100,000 and ETH from levels close to $4,000. Analysts expect that open interest in ETH will decrease because it is doing lousy on the spot while remaining somewhat cautious given the prevailing view remains bullish. The funding rate in the market is currently decreasing due to this cautionary stance.

ETH pulls back while BTC flatlines

The report has brought forth several major trends in the derivatives market. ETH perpetual open interest has plunged due to liquidation of highly leveraged long positions that have reduced funding rates. On the other hand, perpetual activity in BTC remained balanced throughout December 2024 but temporarily spiked when BTC went past $100K last week.

Following unwinding leveraged longs in perpetual swaps, the funding rate has entered into a range of about 0.01%. This would indicate that the market is rebalancing the exposure level to being leveraged and avoids extreme bearish sentiment.

While ETH perpetual positions have retreated, ETH options are outperforming BTC. ETH options remain positive, with end-of-year expirations approaching, however, trading volumes have subsided as spot price movements influence the market. ETH options are showing an inverted term structure compared to BTC’s flat structure driven by realized volatility exceeding forward-looking expectations.

This paper will detail an analysis of the spot trading volume trend, futures, options, and perpetual contracts, giving minute details about the evolution process of the cryptocurrency derivatives markets.