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Exploring Crypto Market Dynamics through Options Data
By: Tanay Ved & Matthias Funke
Key Takeaways:
Options are increasingly being used to manage risk, express directional views, and gauge market sentiment, making them a powerful lens for understanding crypto market dynamics.
Open interest in BTC options has surged 5x since 2022, reflecting the rising adoption and liquidity in options markets. Deribit accounts for the vast majority of activity, while BTC-USD, XRP-USDC, ETH-USD, are among the top traded pairs across exchanges.
Positioning for Deribit’s options contracts in the medium-term (expiring 12/25) shows a bullish tilt in BTC, with open interest concentrated between $90K–$180K. ETH positioning is more dispersed across strike prices, reflecting less consensus on its future direction.
Short-term implied volatility for both BTC and ETH has recently risen, reflecting growing expectations of near-term price swings.
Introduction
Options are quickly becoming a core part of crypto’s market structure, complementing the more established spot and futures markets. They offer participants another tool in their arsenal to hedge risk, express directional views and interpret market sentiment. In late 2024, the SEC approved options trading on spot Bitcoin ETFs, and Coinbase recently acquired Deribit, catalysts that collectively demonstrate the evolution of options in crypto. As liquidity in these markets deepens, options data offers a valuable lens into how traders are positioned, and what the market collectively expects.
In this issue of Coin Metrics’ State of the Network, we examine crypto market dynamics through the lens of options data, exploring trends in open interest and volume, and what they reveal about positioning, volatility expectations and broader shifts in market sentiment.
Understanding Options
Options are a type of derivatives contract which give the owner the right, but not the obligation to purchase (call) or sell (put) the underlying asset at a pre-determined price (strike price) by a set expiration date. Like other derivatives, their value is derived from the price of the underlying asset, in this case, crypto-assets like BTC and ETH.
Options are a powerful tool for managing risk, hedging against downside moves, or expressing directional views through speculation. Because of how they’re priced and traded, options also offer a unique lens into the market’s collective expectations for future price movement and volatility.
There’s two main types of options that serve different strategic purposes:
Call Options: Give the holder the right to buy the underlying asset at the strike price. Traders often use calls to express bullish views, betting that the asset’s price will rise above the strike price by expiration.
Put Options: Give the holder the right to sell the asset at the strike price. Puts are commonly used to hedge against downside risk or speculate on price declines.
Option Mechanics: Strike & Expiry
Each options contract is defined by a few key characteristics that determine its value and behavior:
Strike Price: The price at which the trader can buy or sell the asset.
Expiration Date: The date by which the option expires, or must be exercised.
Premium: Price paid by the buyer of an options contract.
The premium, or market value, of an option fluctuates constantly based on the price of the underlying asset, time till expiration, and broader market conditions such as volatility.
As an illustrative example, we can consider the matrix below that visualizes the relationship between strike price and expiration date for BTC-USD options on Derbit. Each dot represents an active options contract (with colored dots indicating selected contracts), organized by strike price on the horizontal axis and expiration date on the vertical axis, extending out till March 2026.
Source: Coin Metrics Market Data Feed & CM Labs
Green bars along the top highlight strike prices with the highest open interest, indicating levels where market participants are most concentrated. This grid can help us build an intuition for how options markets are structured, where interest is most clustered and how an option’s value can shift based on these factors.
Measuring Market Participation
Open interest is one of the foundational metrics in options markets. It refers to the total number of outstanding (unsettled) options contracts and is a valuable indicator of market participation and liquidity. This can be measured in contract count, market value, or in notional USD terms. Alongside it, options volume reflects the market value or notional value of contracts traded over a given period, capturing how actively participants are engaging with the market.
Source: Coin Metrics Market Data Pro
Bitcoin (BTC) call and put open interest has grown significantly since early 2022, climbing from around $5B to over $30B in 2025. This growth in options adoption has accelerated in recent months as markets experience a boost in optimism and volatility after the U.S. elections. Options volume has also risen, albeit seeing bursts of activity since January.
In the chart below, we see notional open interest broken down by trading pairs across options exchanges. BTC-USD continues to hold the largest share of notional open interest, reflecting its liquidity and maturity. Interestingly, open interest for XRP-USDC has grown significantly, surpassing ETH-USD since mid 2024 as ETH saw a relative decline in options demand. Beyond the majors, pairs like MATIC-USDC and DOGE-USDT have also seen periods of speculative interest.
Source: Coin Metrics Market Data Pro
The lion’s share of activity takes place on Deribit, an offshore exchange recently acquired by Coinbase. Deribit accounts for over $60B in total open interest, far ahead of competitors like Binance and OKX, which each see around $4–$5B. In the U.S., the CME offers access to options on regulated futures contracts for Bitcoin and Ethereum. While these contracts differ structurally from spot-based options traded on Deribit, they represent a growing segment of institutional crypto derivatives activity.
Options Market Positioning: Bullish or Bearish?
Bringing these concepts together, we can use options positioning to understand where the market expects prices to move. The time to expiry may appeal to different participants with shorter dated contracts typically attracting speculators and tactical traders while longer-dated options often used by investors expressing broader market views.
The chart below shows BTC and ETH open interest by strike price for contracts expiring on December 25th 2025 on Deribit, offering a snapshot into how participants are positioning for long-term outcomes. For BTC, there is a strong concentration of call options between the $90K and $180K, with a sharp spike at the $170K level. This suggests a bullish bias and that traders are positioning for the possibility of a rally into the year-end. Put options are mostly clustered in the $60K–$80K range, likely representing downside hedges.
Source: Coin Metrics Market Data Feed
On the other hand, ETH’s open interest is more dispersed across a wider range of strike prices, with clusters around $2K, $3K, $6K. While this indicates some bullish positioning, it also suggests less consensus around ETH’s future trajectory. Interestingly, ETH has more open contracts than BTC, but its total USD open interest is much lower. This is due to ETH’s smaller contract size and lower price, making it more accessible to retail traders, while BTC tends to represent larger notional exposure.
These insights from options markets can also be paired with funding rates from perpetual futures to build a more complete view of market positioning. Funding rates reflect real-time sentiment and leverage in derivatives markets. While aggregated futures funding rates for BTC & ETH were negative in parts of 2025, suggesting more bearishness, they have started to flip positive, aligning with some of the bullish sentiment observed in options markets.
Interpreting Implied Volatility
Implied volatility (IV) represents the market’s view of how significantly the price of the underlying asset could fluctuate in the future. Similar to price, implied volatility is a property of options contracts and changes based on demand and market conditions.
The chart below shows how BTC implied volatility has evolved across different maturities for at-the-money (ATM) options on Deribit. An option is said to be ATM when its strike price is equal, or close to, the current market price of the underlying asset. These options are often the most sensitive to changes in price, making them particularly informative when gauging the market’s consensus expectations.
Source: Coin Metrics Market Data Pro, Implied Volatility
Shorter-dated expiries like 1D and 3D are far more reactive to market swings, with pronounced spikes during periods of uncertainty in recent months. Longer-dated expiries (30D, 90D and 1y), on the other hand, remain more stable and reflect broader expectations of future volatility rather than immediate sentiment.
To complement this, the chart below shows ETH’s implied and realized volatility on Deribit over the past month, at a 1 hour frequency to capture short-term changes. ETH’s 7-day implied volatility rose significantly on May 7th, coinciding with its 30% rally and also spiked to 96% on May 18th. Realized volatility followed these moves as markets reacted to short-term expectations.
Source: Coin Metrics Market Data Pro
In comparison, BTC’s short-term implied volatility has remained relatively lower but also picked up on May 18th, as BTC posted its highest-ever weekly close at $106.9K.
Conclusion
With crypto gaining maturity, options are becoming an important cornerstone of the market's infrastructure, offering a familiar toolkit in this novel, growing asset class. In this issue, we explored how data on open interest, strike distributions and implied volatility can shed light on positioning, sentiment, and future expectations. While we focused on these metrics, tools like options Greeks and volatility surfaces can also provide deeper insight into how options react to price, time, and volatility. As adoption grows, options data will become an increasingly important guide to understanding and navigating crypto markets.
Coin Metrics Updates
Last week, we released a Sector Analysis Report on Stablecoins. For a deep-dive into the stablecoin sector, read the report here.
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