Bybit and Block Scholes Report points to early signs of crypto market recovery

Bybit, the world’s second-largest cryptocurrency exchange by trading volume, has published its latest Crypto Derivatives Analytics Report in partnership with Block Scholes, signaling early signs of stabilization in digital asset markets after a volatile start to December.

The report analyzes derivatives data and trading behavior following the sharp selloff on December 1, which was triggered by hawkish comments from the Bank of Japan. 

Despite renewed optimism after Vanguard opened crypto exchange traded fund (ETF) trading, traders remain cautious as major cryptocurrencies continue to trade below their record highs.

“Cryptocurrencies have been buffeted by multiple crosswinds, from shifting expectations surrounding major central bank policies, to mounting concerns over the viability of DATs,” said Han Tan, Chief Market Analyst, Bybit Learn. “Major crypto prices are likely to remain beholden to macro forces over the immediate term, especially with the pivotal Fed rate decision looming, even as the crypto world attempts to shake off the ghosts of the Oct 10 liquidation event,” he added.

Sentiment slowly reversing, not yet bullish 

In the last 24 hours, Bitcoin (BTC) rebounded to a two-week high above $93,000, while Ethereum (ETH) regained the $3,000 mark after the early December drop. 

Options market data shows that traders have significantly scaled back their bearish positions. The report notes that put-call skew premiums have declined from 10–13 percentage points at the start of the month to just 2–4 percentage points, suggesting that downside fear has eased and crash protection is being priced with less urgency.

While open interest in perpetual futures has seen a modest uptick during the recovery, overall activity remains subdued compared to pre-October levels. This points to lower participation in leveraged trading and an absence of liquidation cascades that typically occur in over-leveraged markets.

Block Scholes’ proprietary Risk Appetite Index also indicates that sentiment is improving, though investors remain cautious. The index measures euphoria when readings rise above 1 and panic when they fall below -1, and momentum within it continues to show a close relationship with spot market returns.

Basic Attention Token leads altcoin rebound

The report also highlights the strong performance of Basic Attention Token (BAT), which has risen more than 100% since October 11 to around $0.27, outperforming most of the altcoin market. 

The Ethereum-based token, which powers the Brave browser’s privacy-focused advertising ecosystem serving over 100 million users, helped position social tokens as the second-best performing category over the past month, behind only privacy coins.

Featured image via Shutterstock.