Bybit and analytics firm Block Scholes released a derivatives market report indicating mixed signals for Ethereum and Bitcoin. 

The report highlights a decline in Ethereum’s (ETH) perpetual open interest, primarily due to the liquidation of overleveraged long positions. These positions had accumulated during a period of optimism but were reset by falling ETH spot prices, according to the report shared with crypto.news.  

The report also notes that ETH futures contracts have not experienced the same decline in open interest as ETH perpetual swap contracts during a brief pause in upward price momentum. However, positioning has increased for both (BTC) and ETH. 

Despite this uptick, the overall size of open positions has not yet recovered from the expiration of approximately $20 million in contracts at the end of November 2024. This indicates that traders who held November-expiring contracts have not returned to the market with the same volume. In contrast, BTC perpetual positions have remained stable, even after a recent pullback from a high of over $100,000.

Perpetual swaps are a type of derivatives contract that enables traders to speculate on an asset’s price without owning it. They are widely used in crypto markets, but unfavorable price movements can force leveraged traders into liquidation, reducing market activity.

ETH beats BTC in options, driven by volatility

The report reveals that Ethereum continues to outperform Bitcoin in options open interest, particularly as end-of-year expirations approach. However, trading volumes have decreased, reflecting a general sense of caution in the market.

The options term structure for ETH shows higher realized volatility compared to future expectations, signaling a difference in sentiment from BTC, which displays a flatter term structure.