From deribit insights

Crypto Market Update

Bitcoin surged this week, approaching $69k with $72k in sight, thanks to October’s seasonal boost. But strong USD momentum, driven by US Treasury selling, is putting a temporary lid on BTC gains. Institutional interest remains strong, with $2.13 billion in BTC ETF inflows over the last six days. A major boost comes from the SEC approving BTC ETF options on the NYSE, enhancing liquidity. As Bitcoin’s dominance hits 58%, risk-on sentiment is expected to persist, supported by strong US equities and Trump’s lead in the polls. More gains ahead.

Crypto Volatility Overview

Crypto volatility eased last week as the rally stalled. Implied volatility dipped in BTC’s short end, though ETH held up better. Long-term vols remain stable, likely holding until after the elections. Price action stayed within expected ranges, with ETH attempting a breakout over the weekend but failing. Despite Trump’s rising odds, the impact on crypto prices has paused. We’ll see more clarity after Nov 5th .

Skew Term Structures

Skew term structures edged higher, favouring upside despite some hedging this week. Both curves sit in call skew, but premiums are below peak levels due to a lack of breakout confirmation. With $2 billion flowing into BTC ETFs, we may see last-minute hedging demand, though puts aren’t commanding high premiums.

ETC/BTC and Relative Value

ETC/BTC bounced off the lows but gave back half its gains. ETH volatility outperformed BTC this week, widening the vol spread to over 6 points. Our ETH short covering proved well-timed, and we see little edge in trading the spread at these levels. Skew RV remains stable, with a slight put premium in short expiries and a call premium in longer expiries past March 2025.

BTC and ETH Option Flows

BTC volumes surged 50% to $11 billion, with a 63/37 split favoring calls. Despite this, flows weren’t as bullish, with profit-taking on short-dated call spreads and hedging activity in Dec24 and Jun25 risk reversals. Some bullish positioning included rolling Dec 75k calls to 100k strikes. ETH volumes rose 30% to $1.8 billion, with a 58/42 split favoring puts. Lack of strong bullish flows persisted despite early spot strength.