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Bitcoin’s derivatives market looks nothing like it did a few years ago. Options now account for nearly 50% of total notional open interest across Bitcoin derivatives, roughly double their share from earlier periods when they hovered around 25%. The shift represents one of the most significant structural changes in crypto trading since the asset class went institutional.
A joint report from Glassnode and Bybit, titled “The State of Crypto Derivatives,” lays out the transformation in stark terms. Dated futures, once the backbone of crypto derivatives trading, have seen their volume collapse by 97% from peak levels hit in 2021. The instruments that replaced them tell a story about what traders actually want: perpetual futures for directional bets and options for everything else.
The death of dated futures and the rise of options
Perpetual futures, which have no expiry and use funding rates to stay tethered to spot prices, turned out to be a better fit for a market that trades 24/7 and doesn’t operate on quarterly cycles.
The Glassnode-Bybit report found that options gained market share in four out of five distinct market regimes since 2019. The most aggressive expansion happened during prolonged bear markets, which makes intuitive sense: when prices are falling, the ability to buy downside protection or structure event-specific trades becomes a lot more valuable than a leveraged long.
Bybit’s climb through the options ranks
The report also tracks competitive dynamics among exchanges, and Bybit’s trajectory stands out. The exchange now holds a 28% market share of Bitcoin options volume across four tracked venues. That’s up from under 10% when it first launched options trading.
Bybit’s options open interest tells a similar story, growing from $529 million to $2.33 billion. The exchange has been even more dominant in adjacent categories. It has led Ether options volume for 143 consecutive days and holds a leading position in tokenized gold perpetuals.
What this means for market structure
When half your derivatives market is options rather than futures, the entire character of trading changes. Options traders tend to think in probabilities and distributions rather than simple directional bets. They price in specific events, like halving cycles, regulatory decisions, or macroeconomic catalysts, with precision that futures simply can’t match.
A derivatives market where options represent nearly half of open interest looks a lot more like traditional commodity or equity markets. As the options market grows, dealer hedging activity can dampen spot market volatility during normal conditions while potentially amplifying it around key strike prices and expiration dates.
The toolkit available in crypto derivatives is now sophisticated enough to support strategies that were previously only possible in traditional markets. Collar strategies, risk reversals, calendar spreads, and volatility trades are all viable in a market where options liquidity has reached this scale.
Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
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