Nick Forster, Founder of onchain options DeFi protocol, Derive ($77.3M TVL, $7.1B total trade volume), noted that in the past 7 days, they’re seeing notable stability in Bitcoin’s volatility, with the 7-day ATM IV “maintaining at 63% and the 30-day ATM IV at 55%.”
This close alignment suggests the crypto-assets market anticipates “significant movements soon.”
Forster added that the Call-Put skew index for the upcoming Dec 27 expiry has reverted, with a significant “30% drop in the past 24 hours, shifting towards more protective strategies.” They also mentioned that it suggests traders are hedging against “potential downside risks, likely in response to BTC falling almost 5%.”
But pullbacks like these are not uncommon in bull markets, the update clarified.
Forster also noted that they are seeing strong structural tailwinds for BTC, bolstered by favorable conditions such “as the interest-rate cutting cycle and evolving regulatory frameworks.” They pointed out that, in addition to this, speculative but potentially market-moving developments like the US government considering Bitcoin reserves “could significantly influence market dynamics.”
The fact that there’s about a “30% chance” that this could occur within the first 90 days according to Polymarket, adds to the “complexity of current market conditions.”
As noted in the update shared with CI:
“We have an estimated 68% chance of Bitcoin moving between -16.03% ($81,493) and +19.09% ($115,579), and a 5% chance of moving beyond -29.49% ($68,429) and +41.83% ($137,645) by December 27. Interestingly, the likelihood of BTC exceeding $100,000 has risen to 45% from last week’s 34%, with a new 4% probability of surpassing $150,000.”
The Bitcoin, Ethereum, and crypto market update also mentioned that the overwhelming demand for options, “particularly calls, signals a strong market appetite for both upside potential and downside protection.”
Derive.xyz recorded 41.3% of contracts traded were “calls and 38.3% were puts, with very few sellers (8.7% and 11.7% for calls/puts sold respectively).”
Derive.xyz also stated in the report that Ethereum’s volatility is on a sharp rise. The 7-day ATM IV has “surged by 17% to 78%, and the 30-day ATM IV is up by 9% to 71%.”
The report further noted:
“The probabilities for ETH’s movements are similarly large, with a 68% chance of oscillating between -19.40% ($2,815) and +24.06% ($4,333), and a 5% chance of greater than -35.03% ($2,269) and +53.92% ($5,375). There’s also a 10% chance of ETH reaching above $5,000 by the end of the year.”
Despite this, the trading activity around ETH is more “balanced” compared to BTC, showing a “diversified” market sentiment.
The report also revealed:
“Moreover, the total value locked (TVL) on Derive.xyz has reached a new peak at $77.3 million, with monthly active traders also hitting an all-time high. This growing engagement from the trading community alongside favourable market dynamics form a solid foundation for the crypto options market as we approach the new year.”
As mentioned in the crypto market update, Derive.xyz, formerly named Lyra (TVL $77.3M, total trade volume $7.1B), is the decentralised protocol that creates unique and programmable onchain options, perpetuals, and structured products.
Co-founded by Nick Forster, Jake Fitzgerald, Mike Spain and Dom Romanowski, it empowers users with “accessible automated strategies to build, grow, and preserve wealth.”
