Crypto Derivatives Market Pulse

Market Recap

Mass Liquidations & Macro Fears Shake Crypto Markets

• BTC and ETH both saw sharp sell-offs amid renewed inflation fears triggered by U.S. tariffs announced by President Trump.
• Since the most recent peak of $104.6K a week ago, c. $660m of long BTC positions have been liquidated, as overleveraged bulls were flushed out.
• ETH took a bigger hit than BTC, with ETH/BTC breaking key support at 0.03, reflecting a rotation away from ETH.

Bitcoin Holds Key Levels Despite Volatility

• BTC ranged between $96K and $100K, stabilizing after the initial sell-off due to tariff pauses.
• Crypto Czar David Sacks hinted at a Strategic Bitcoin Reserve, stating the administration is awaiting cabinet confirmations before moving forward.

Volatility Insights & Market Sentiment

Short dated Volatility reduces post Market Turmoil

• Since Monday, BTC’s 7 day implied volatility dropped from 60% to 50%, steepening the volatility term structure, post the disorderly price action.
• ETH’s term structure flattened, with front-end implied volatility dropped from c.90% to c.70%

Options Market Reflects Short-Term Caution

• BTC 7-day 25-delta skew shifted from neutral to -2.5%, signaling increased short-term uncertainty. However, longer-dated skew (1 month+) remains stable, with a ~3% vol premium for calls, suggesting the sell-off may not be prolonged.
• ETH exhibits a similar skew pattern, though its 7-day skew is more pronounced at -4%, indicating a stronger short-term bearish bias.

Key Takeaway

• Short-term downside pressure remains, but options sentiment suggests volatility may settle soon as long-dated options maintain a structurally bullish bias.
• Stay alert as macro headlines will continue to drive rapid shifts in crypto market sentiment.

Volatility

Author: Carlo Accolla

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