DUBAI, UAE, Dec. 26, 2024 /PRNewswire/ — Bybit, the world’s second-largest cryptocurrency exchange by trading volume, released the latest Crypto Derivatives Analytics Report in collaboration with Block Scholes, highlighting the muted market volatility despite major options expirations on Friday. BTC and ETH’s realized volatility has increased, but short-term options haven’t adjusted to this change. This indicates that while spot prices are fluctuating, the options market is not fully reacting to these shifts, although BTC and ETH volumes have displayed slightly different patterns.

With more than $525 million in BTC and ETH options contracts expiring on Dec 27, 2024’s end-of-year options expiration looks set to be one of the biggest yet, yet expectations for volatility have remained subdued. The report highlights an unusual inversion in ETH’s volatility structure, but BTC has not mirrored the reaction. Additionally, a change in funding rates—sometimes turning negative as spot prices drop—signals a new market phase. Notably, BTC’s volatility structure has been less responsive to changes in spot prices, whereas ETH’s short-term options are exhibiting more noticeable fluctuations.

Key Findings:

BTC Options Expirations:

In the past month, BTC’s realized volatility has been higher than implied volatility on three occasions, each time reaching a relatively calm equilibrium. Open interest in BTC options remains high, contributing to potential increased volatility as we near the end of the year. Around $360 million worth of BTC options (both puts and calls) are set to expire soon, which can affect price movement.

ETH Options: Calls Dominate

Despite a mid-week inversion, ETH’s volatility term structure has flattened, maintaining levels similar to those seen over the past month. In the final week of 2024, calls overwhelmed puts in open interest in ETH options, although market movements and trading activities are more on the put side. 

Access the Full Report:

Gain deeper insights and explore the potential impacts on your crypto trading strategies by downloading the full report here: Bybit X Block Scholes Crypto Derivatives Analytics Report (Dec 24, 2024)

#Bybit / #BybitResearch

About Bybit

Bybit is the world’s second-largest cryptocurrency exchange by trading volume, serving a global community of over 60 million users. Founded in 2018, Bybit is redefining openness in the decentralized world by creating a simpler, open and equal ecosystem for everyone. With a strong focus on Web3, Bybit partners strategically with leading blockchain protocols to provide robust infrastructure and drive on-chain innovation. Renowned for its secure custody, diverse marketplaces, intuitive user experience, and advanced blockchain tools, Bybit bridges the gap between TradFi and DeFi, empowering builders, creators, and enthusiasts to unlock the full potential of Web3. Discover the future of decentralized finance at Bybit.com.

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There is a prospect that the renewable energy industry could be revitalized due to President-elect Donald Trump’s proactive stance on cryptocurrency and artificial intelligence (AI).

On the 25th (local time), the Wall Street Journal (WSJ) highlighted the power consumption involved in AI and cryptocurrency mining businesses, predicting a need for more power sources. Senator Kevin Cramer told the Wall Street Journal, “We don’t have enough electricity for servers used in AI or cryptocurrency,” emphasizing the need for as much energy as possible, including not only fossil fuels but also renewable energy.

President-elect Trump has so far taken a negative stance on the ‘climate crisis’ and its solution, renewable energy, but it is explained that this position could change. The media noted, “Trump has previously criticized electric vehicles, but he shifted his stance after getting closer to Elon Musk, CEO of Tesla. Trump’s stance on renewable energy could also be relaxed.”

It’s no secret that growth investing mastermind Cathie Wood expects big things from Bitcoin (BTC 0.05%). The Ark Invest fund manager started talking about crypto before she was a household name, and has recently doubled down on her bullish projections again.

In a Bloomberg TV interview last Thursday, Wood reiterated a Bitcoin price target of $1.0 to $1.5 million by the year 2030. But that’s not the whole story. The cool part of Cathie Wood’s Bitcoin coverage is that she keeps explaining her investment thesis in greater detail over time.

Last week’s interview was no exception. So let’s check out Cathie Wood’s latest nuggets of Bitcoin-friendly economic theory.

Why Cathie Wood sees Bitcoin as a bargain buy at $100,000

First, Wood noted that the probability of reaching her existing Bitcoin price targets has increased in 2024. Institutional investors are finally taking digital assets seriously, assisted by new tools like the spot Bitcoin exchange-traded funds (ETFs) that launched in January. Their Bitcoin investments should make a big difference to the asset’s price and stability over the next few years.

“[Large investors] must consider an allocation” these days, because there is a hard cap on Bitcoin production in the long run.

94.3% of all Bitcoin that will ever exist has already been produced and is sitting in crypto wallets around the world. You can’t grab a large slice of the total Bitcoin pie by making or finding more of it as one might do with physical assets such as gold or oil. The iron-fisted law of supply and demand should inevitably drive the price of this limited asset higher, so financial institutions should start building their Bitcoin portfolios before it gets expensive.

In this context, $100,000 per coin doesn’t qualify as “expensive.” Remember, the long-term target price is measured in millions of dollars. Cathie Wood is playing the long game here.

Bitcoin is a valuable accounting tool

Wood also explained that Bitcoin is more than a speculative asset. Rather than the next value-free “tulip bulb craze,” Bitcoin is serving a significant purpose for people who aren’t just expecting it to gain value over time.

“It’s a global monetary system that is rules-based,” she said. “It is private, it is digital, it is decentralized, and it is backed by the largest [computer system] in the world. It’s the most secure network in the world.”

Bitcoin is similar to a global and very detailed accounting system that tracks all the gold in the world, assigning an owner to every sliver of a gold nugget and protects the data with several layers of cryptography. You can’t cancel or change any transactions or ownership records without essentially breaking Bitcoin’s transaction-recording platform. The asset being tracked in this case is not a physical chunk of noble metal, but the computing work that went into generating a unique digital token.

There is an unknown but very real limit to the amount of physical gold in the world, until entrepreneurs find additional sources on asteroids or other planets. At the same time, there will simply never be more than 21 million Bitcoin tokens, and 19.6 of them are already in circulation. In the long run, this system is almost free from inflation — assuming its security holds up against new attack ideas such as quantum computing algorithms.

Bitcoin vs. Gold: Different inflation effects

Cathie Wood also highlighted how this inflation-proofing approach differs from gold.

“When the gold price goes up, production goes up — the rate of increase in the supply goes up,” she said. “That cannot happen with Bitcoin. It is mathematically metered to go up 0.9% per year for the next four years, and then the supply growth will be cut in half again.”

Indeed, physical gold mining tends to become more common when the metal’s price is high. Miners want to take advantage of this valuable asset when it makes the most economic sense. The equation is different for Bitcoin miners, who will produce smaller and smaller chunks of the digital asset over time. So the cost of minting new Bitcoins will increase while the number of new coins introduced to the market slows down.

So it’s smarter to put in a maximum production effort as quickly as possible, because the return on your mining machinery and electric power investment will only shrink over the years. The same logic suggests that buying Bitcoin early will be more profitable in the long run. Waiting for a lower buy-in price or easier Bitcoin mining environment almost never makes sense.

Why Bitcoin may deserve a spot in your portfolio

So Cathie Wood underscored her 5-year Bitcoin target of at least $1 million per coin, and she offered more detail on her underlying investment thesis.

Other Bitcoin investors may work with different assumptions that result in various target prices, but the overall market tenor is pretty consistent. Bitcoin looks ready to rise from the recent $100,000 pricing milestone. From major banks to ordinary nest-egg builders, most investors should pay serious attention to these newfangled cryptographic tokens.