Crypto derivatives show stability amid recent market volatility

A recent report by Block Scholes and Bybit highlights the stability in the crypto derivatives market, emphasising its resilience despite recent market turbulence. 

The report covers various segments, including futures, options, and perpetual contracts, and focuses on the market’s ability to endure significant events without substantial disruptions. 

The report particularly emphasises the stability in futures markets, even as Bitcoin (CRYPTO:BTC) faced a sharp sell-off, dropping below $59,000. 

Despite this downturn, open interest in futures markets remained stable. 

This stability suggests that traders have been cautious, reducing leveraged positions to limit the risk of forced liquidations. 

The report notes that this trend has persisted throughout the year, indicating a careful approach by market participants during periods of increased volatility. 

A key point from the study is the positive shift in the funding rate for Toncoin (CRYPTO:TON) following notable market events. 

This shift signals a renewed interest in leveraged positions among traders. 

Moreover, the report provides insights into the market sentiment regarding the upcoming U.S. presidential election. 

It notes that the volatility term structure suggests a bullish sentiment for out-of-the-money (OTM) calls on options expiring after the election. 

According to the report, "The term structure of volatility holds a very similar shape to before Chair Powell’s Jackson Hole speech... Smiles for expiries after the election retain a much stronger bullish skew towards OTM calls, while short-dated smiles show a demand for downside protection." 

This suggests that traders expect a favorable environment for crypto assets post-election, though there is still evident demand for downside protection in shorter expirations. 

Overall, the findings from Block Scholes and Bybit point to a maturing crypto derivatives market that is increasingly resilient and adaptive to shifting market dynamics, even in the face of significant events.