Our monthly report delves into insights from options volatility to inspire your next crypto move.

: April 2025 saw BTC's implied volatility surge above 75% due to tariff chaos, but it collapsed to 35% within a week, indicating a surprising short-term drop in volatility expectations despite ongoing macro uncertainty.

: BTC's return above $100K was met with muted enthusiasm in the derivatives market, suggesting that 

traders no longer view this level as a significant psychological barrier, and the rally isn’t likely to be sustained.

: ETH significantly outperformed BTC with a 23% rally, leading to increased demand for short-dated calls and a positive shift in the options market, highlighting renewed bullish sentiment.

: Historical trends suggest a potential summer lull in volatility in store for BTC, raising questions about whether this pattern will repeat in 2025 amidst ongoing macroeconomic challenges.

Bitcoin’s volatility plunges in late April

April 2025 witnessed significant volatility in the cryptocurrency market, particularly influenced by US trade policies. As President Trump announced steep reciprocal tariffs, the crypto landscape experienced sharp fluctuations. Bitcoin (BTC) initially demonstrated resilience, despite widespread sell-offs in equities and the US dollar, only to succumb to a decline from $88K to $75K by early April. This period was characterized by a dramatic rise in implied volatility that peaked above 75% as traders sought protection through short-dated puts. However, as the tariffs faced moderation, implied volatility plummeted to 35% by mid-April, marking the lowest level since early March.

Interestingly, while short-tenor volatility collapsed, 

the back end of BTC's term structure remained elevated, signaling that market participants expect heightened volatility in the mid-term

. Amidst this backdrop, realized volatility fell below the five-year seasonal average, paralleling similar trends in previous years and suggesting a 

. The historical pattern contrasts that BTC often experiences a rebound in volatility heading into May, raising questions about whether this trend will persist.

Subdued derivative response suggests Bitcoin rally might not endure

The market's reaction to BTC's resurgence above the $100K threshold was notably subdued compared to previous instances. While BTC rallied 20% following the initial tariff sell-off, the derivatives market displayed a muted response. The 25-delta put/call skew, a measure of market sentiment, indicated only a slight bias toward out-of-the-money calls, contrasting sharply with sentiment previously when BTC first breached the $100K mark in December 2024. This lack of exuberance suggests that traders no longer view $100K as a significant inflection point, raising concerns about the sustainability of the rally. 

Meanwhile, funding rates and implied volatility — though still bullish — didn’t reach the extremes observed in earlier months, indicating more cautious market sentiment. The relationship between BTC's spot price and implied volatility suggests that although traders are optimistic, they’re waiting for BTC to approach previous all-time highs before adjusting their volatility expectations.

Ethereum's option data points to further rally

In stark contrast to BTC, Ethereum (ETH) displayed remarkable resilience and outperformed major cryptocurrencies, gaining 23% overnight following favorable trade news. This rally catalyzed a surge in demand for short-dated calls, pushing front-end volatility expectations significantly higher. The response from the derivatives market was robust, inverting the term structure and indicating renewed bullish sentiment toward ETH, even as it’s trading well below its all-time high.

The ETH options market exhibited a shift from neutral to slightly negative skew, to a 10% bias favoring out-of-the-money calls, reflecting the market's confidence in ETH's potential to regain lost ground. Despite overall macroeconomic uncertainty, the demand for ETH options suggests that traders are optimistic about Ether’s future price movements.

In conclusion, April 2025 highlighted the complex interplay between macroeconomic factors and cryptocurrency market dynamics. While BTC faced challenges in eliciting strong responses from derivatives markets upon recrossing the $100K threshold, ETH's performance indicated a divergence in market sentiment. As traders navigate the evolving landscape, the potential for seasonal volatility patterns and the influence of macroeconomic developments will remain critical factors in shaping future market expectations.

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Bybit X Block Scholes options volatility report (April 2025): Data suggests Bitcoin rally might not endure, but Ether sees further upside

Our weekly crypto derivatives analytics report delves into macro events; the current state of crypto and trading signals from spot trading volume; and futures, options and perpetual contracts.

After mostly trading sideways at the end of April 2025, a US-UK trade deal sparked a crypto rally. BTC surged past $100K for the first time since February, but it’s ETH's performance that captured the derivatives market's attention. 

A 23% increase in ETH's spot price led to an inverted term structure and a spike in front-end volatility. The put/call skew for ETH shifted from a bearish bias to a nearly 10% skew toward OTM calls. Other sentiment indicators, such as perp funding rates and futures yield, also supported the rally. In contrast, while BTC's funding rates and skew have increased, its implied volatility remains low at 40%, over 30 points below ETH's 7-day implied volatility.

Please check out the report’s highlights.

ETH’s record performance since 2021 was propelled by positive term structure

ETH has significantly outperformed BTC and the top 10 cryptocurrencies, marking its largest single-day gain since May 2021. The options market has reflected this enthusiasm, with implied volatility for short tenors rising sharply and inverting ETH’s term structure, thus contrasting with BTC's muted, positively sloped structure. The 7-day tenor for ETH is now trading at a 33-point premium over that for BTC. 

While puts dominate BTC's open interest, ETH is seeing the opposite trend. On May 8, 2025, options volumes surged over $120M, more than double the typical monthly volume, with $60M more in calls than puts. ETH now boasts a positive futures curve and funding rates, as well as a strong skew toward OTM calls.

ETH sees exceptionally bullish put/call skew

ETH's substantial outperformance in the current crypto rally has led to bullish sentiment in its derivatives markets. Funding rates have surged, futures yields are strongly positive and the put/call skew has shifted significantly toward OTM calls, now close to 10%. This starkly contrasts with early April, when the skew was 20% toward OTM puts. Although ETH has underperformed (relative to BTC and other "ETH killers"), it has rebounded in this rally, with the ETH/BTC ratio rising after spending most of the year declining.

Open interest for Bitcoin options increased, with implied volatility remaining suppressed

The announcement of the new US administration's first trade deal, nearly 30 days into Trump's 90-day tariff pause, jolted crypto markets, pushing BTC back up above $100K. Surprisingly, implied volatility has remained suppressed, failing to invert BTC's term structure, with front-end volatility trading at around an 18-month low of 35-40%. On May 8, 2025, options volumes surged, with call volume reaching $189M, reversing last week's trend of higher put volumes. Meanwhile, open interest rose steadily to exceed $300M, the highest level this month, but remains significantly larger for puts than for calls despite the price increase.

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Bybit X Block Scholes crypto derivatives analytics report (May 9, 2025): Ether’s put/call skew turns remarkably more bullish than Bitcoin’s

This article explores how Sign works, its flagship products (such as TokenTable, SignPass and EthSign), its native token (SIGN) and how to trade SIGN on Bybit.

Sign is an omnichain attestation infrastructure that empowers users and developers to verify real-world claims on-chain. Built for a more transparent and decentralized future, it eliminates the need to “just trust” and enables everyone to verify with cryptographic proof.

This article explores how Sign works, its flagship products (such as TokenTable and EthSign), its native token (SIGN) and how to trade SIGN on Bybit.

 is an omnichain attestation protocol designed to make it easy for anyone to verify the authenticity of any claim — 

. Whether it’s a document, credential or user identity, Sign transforms traditional trust models into verifiable, cryptographic attestations. 

Sign’s mission is to replace outdated, opaque validation systems with transparent, 

 proof — enabling a future where “verify” replaces “trust.” Through tools like schema registries and digital signatures, Sign empowers users to bring accountability and integrity to digital interactions.

Sign is developed by the team behind EthSign, a 

-native e-signature and agreement platform. Its core team brings deep experience in 

 development and cross-chain integrations.

The project is backed by top-tier investors, including Sequoia Capital China (now known as HongShan Capital Group), Mirana Ventures, HashKey Capital and Hack VC.

This strategic funding positions Sign as a foundational layer in the web3 infrastructure stack.

Sign allows users to create attestations — cryptographically signed statements that prove the validity of claims, such as credentials, achievements or actions. These digital proofs can be verified by anyone at any time, making them tamperproof and transparent.

Sign’s key technical elements include a schema registry that ensures consistent data formatting, digital signatures proving authenticity, and on- and off-chain attestations with support for revocation or updates

This system acts like a programmable layer for web3, bringing a new level of trust to identity, credentials and data exchange.

TokenTable is Sign’s flagship token distribution platform. It helps projects unlock, distribute and manage tokens transparently and securely at scale.

It uses Sign’s attestation engine to verify token unlocks, 

 and vesting schedules, ensuring traceable, auditable token flows.

SignPass is a blockchain-based identity solution that brings real-world credentials on-chain. One notable implementation is the Sierra Leone PR Card, used for the world’s first government-approved on-chain permanent residency program.

SignPass offers encrypted on-chain records for easy 

 verification, physical ID issuance for daily identity use and streamlined digital application systems for cross-border access.

It showcases the way blockchain can modernize public sector services worldwide.

EthSign is a decentralized contract signing platform that lets users create, sign and store legally binding agreements directly on-chain. It removes intermediaries and ensures documents are immutable and accessible.

EthSign reinforces Sign’s mission by bringing traditional documentation into the realm of verifiable web3 attestations.

The SIGN token is the native utility token powering the Sign ecosystem. It’s used for:

The total supply is capped at 10 billion SIGN, with 1.2 billion tokens in circulation. While the fully diluted valuation (FDV) sits above $746 million as of May 7, the circulating market cap is approximately $89.6 million. SIGN continues to gain traction across exchanges and developer networks.

SIGN is available for trading on Bybit via Spot trading and as a USDT Perpetual contract. Bybit offers up to 75x leverage for the SIGNUSDT Perpetual contract and supports secure, high-liquidity spot trading.

Start exploring the future of attestations with SIGN on Bybit today.

Intermediate

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Sign (SIGN): Web3 protocol for trustless attestation

Compliant trading means following platform rules and avoiding manipulative behavior. Learn more about how you can trade responsibly and compliantly on Bybit.

Crypto trading has come a long way from what used to be the domain of institutional players, and is now open to almost anyone with an internet connection. It’s easier than ever to buy and sell digital assets, try new strategies or build a portfolio from scratch all within minutes.

But with that level of access comes responsibility. As more people join the market, the need for fairness and accountability has become even more important. This isn’t just about price charts or profits — it’s about keeping the playing field level for everyone involved.

At Bybit, we take that responsibility seriously. We're here to offer the tools, safeguards and education you need to help you trade responsibly and to protect the platform from misuse.

This article describes what it actually means to trade compliantly, why it matters — and what can happen if things go off course.

Compliant trading means playing fair, following the platform’s rules, staying within the boundaries of what’s allowed and avoiding anything that could unfairly affect the market.

It’s not about avoiding risk: it’s about knowing what you’re doing, using official tools the right way and making sure your trades aren’t causing harm to yourself or others.

In short, compliant traders don’t just focus on their P&L — they understand that how they conduct themselves while trading matters. Responsible trading protects their accounts, keeps the platform stable and builds long-term credibility in the crypto ecosystem.

Why does responsible and compliant trading matter?

It’s easy to assume that compliance is only something platforms or regulators need to worry about. But in reality, every trader plays a part. When someone attempts to exploit the system — for example, by coordinating mass trades through off-platform channels — the consequences can ripple across the entire market.

In extreme cases, irresponsible trading behavior can:

And if the trades in question are linked to coordinated action, use of fake accounts or external bots? That opens the door to account freezes, compliance reviews and, in some cases, permanent suspension.

Bybit has a responsibility to act when the system is being abused — not just for legal reasons, but in order to protect honest traders.

Common examples of noncompliant or risky behavior

Some traders join Telegram groups or online communities in which KOLs (key opinion leaders) give out coordinated trading instructions (for example, “Buy token A now, sell it in an hour”). This practice isn’t just risky: it often involves a small number of insiders benefiting while the majority end up with losses.

When many people follow the same instruction all at once, it can artificially inflate the price of a low-liquidity token. The KOLs then exit at the top —while others are left with falling prices and unexpected liquidations.

Such a textbook case of market manipulation violates our Terms of Service and, depending upon jurisdiction, could violate financial laws.

Using bots or unverified trading strategies

Some Telegram groups may seem convincing, but trades coordinated off-platform are often unverified and may serve someone else’s agenda. 

 programmed to front-run trades, mimic pump-and-dump strategies or follow unverified signals can trigger compliance red flags and may lead to account restrictions.

Bybit does not support trading bots from unverified sources. They can also trigger flags in our monitoring systems, which may result in account suspension.

Using another person’s account or sharing login credentials — even if it’s with a family member — goes against both Bybit’s policies and global 

(AML) rules. It also opens the door to fraud, loss of funds and irreversible penalties.

Tips for responsible and compliant trading on Bybit

The good news is that there’s a better way to trade — responsibly, safely and with confidence, starting with the right tools, mindset and habits.

Use copy trading the way it’s meant to be used

 is one of Bybit’s most trusted features, and for good reason. It gives users access to professional traders’ strategies while maintaining full transparency. However, it only works if you follow verified 

These traders have been vetted and their stats are fully visible. You can view their P&L, risk settings and trade history. Bybit also provides built-in tools, such as 

 and staking products allow you to earn passive yield with minimal effort. These products are fully backed by our infrastructure and undergo regular audits, and are a compliant way to generate returns without chasing risky trades.

No matter how convincing a Telegram group may sound, remember that trades executed outside of regulated channels are unverified and often unaccountable. They may be coordinated for someone else’s gain.

 offers a wide range of articles and tutorials, covering everything from indicators and oscillators to advanced portfolio strategies. Before following any external signal, it’s worth spending 10 minutes to understand the rationale behind it. In trading, knowledge is your best form of compliance. Before you enter any position, ensure that you fully understand the asset you're trading, the current market conditions and the risks involved.

, never share your login credentials, and always enable two-factor (2FA) authentication. In addition, all trading activity should originate from your own account and remain under your own control.

Bybit’s systems are designed to flag irregular behavior. If your account is found to be engaging in prohibited activity, even unintentionally, you may be:

We take these steps in order to protect the broader user base and to uphold market fairness.

Being compliant doesn’t mean missing out on opportunity. In fact, it’s the opposite. It means you’re using the platform the way it was designed, with safeguards, transparency and trust. Shortcuts might look appealing in the short term, but they rarely end well. The most successful traders on Bybit are the ones who understand risk, stay informed and trade with integrity.

Take the time to learn and use the tools available to you. And remember: protecting your account starts with choosing how you’ll trade.

Beginner

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How to trade compliantly and responsibly on Bybit

Trading

Investing

Haircut is a discount taken on the value of an asset, often expressed as a percentage markdown from the asset’s market value. But how does it apply in crypto's context? Learn more.

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Don’t let the term fool you — a “haircut” in finance has nothing to do with hairstyles or trimming expenses. In finance, a haircut generally refers to the reduction of the value of an asset. This term has different implications, depending on the context. 

This article will explore the different meanings of the term haircut finance and how they can impact various participants, financial instruments and markets. It will also provide examples of haircuts, as well as how to use them to manage risk.

What Does ‘Haircut’ Mean in Financial Terms?

In financial terms, a haircut is a discount taken on the value of an asset, often expressed as a percentage markdown from the asset’s market value. For example, when accepting an asset as collateral for a loan, a lender may lower the collateral value to account for potential market fluctuations. This reduction or percentage difference in value is known as a haircut.

If you want to use a home valued at $100,000 as collateral for a loan, the bank may only recognize the property as being worth $80,000 in collateral. This 20% “haircut” ensures that the lending party has a cushion, in case the market value of the collateral asset ever falls.

The term “haircut” is sometimes used interchangeably with a market maker's spread. Market makers provide liquidity by setting the buying and selling price. They may take a small fee for providing liquidity or facilitating trades, which can also be called a haircut. 

In some contexts, a haircut refers to discounts applied during the debt restructuring process. It involves reducing outstanding interest payments or a portion of a bond payable that will not be repaid. This process typically occurs when a company considers restructuring its debt, and negotiates new terms with existing bondholders. 

The Importance of Haircuts in Financial and Crypto Markets

Haircuts are used as a risk management tool for lending or borrowing in financial and crypto markets. They reduce the uncertainty of an asset's value, protecting lenders from potential loss and allowing borrowers to access funds they may not have otherwise been able to obtain.

Crypto markets, particularly, are at high risk for price volatility and liquidity issues, making haircuts especially relevant. Platforms that provide crypto-backed loans or margin trading typically apply high haircuts to mitigate these risks. 

Calculating a haircut value depends upon a collateral's type, quality and liquidity. Each lender has a unique haircut valuation, based on risk appetite and evaluation. In general, riskier assets have higher haircuts than safer ones. The following factors influence the size of a haircut amount.

: The price of an asset in the market shows how much it’s in demand, and how much is available. If the price is high, it means that demand is high and supply is low. This scenario also means that there’s less risk involved, and hence, lower haircuts. On the other hand, if the price is low, it means that demand is low and supply is high, indicating more risk and higher haircuts.

 measures how much its price fluctuates over time. If an asset has greater volatility, it displays greater uncertainty and unpredictability, leading to higher risk and higher haircuts. Conversely, if an asset has lower volatility, there’s lower uncertainty and greater predictability, resulting in lower risk and lower haircuts.

: The credit quality of an asset's issuer (if applicable) measures how likely they are to default on their obligations. Higher credit quality indicates higher trustworthiness and reliability, which implies lower risk and lower haircuts. Lower credit quality indicates lower trustworthiness and reliability, suggesting higher risk and haircuts.

: An asset's liquidity is measured based on how easily it can be converted into cash without affecting its price. Assets with higher liquidity are more readily available and accessible, resulting in lower risk and lower haircuts. Conversely, assets with lower liquidity are less available and accessible, indicating higher risk and haircuts.

A haircut in finance has various implications for lenders, borrowers and the overall financial system. Some of these implications are as follows.

: A person's haircut can impact their leverage or amount of borrowed funds as compared to owned funds. This factor can in turn affect their ability to borrow money from a lender. Higher leverage can mean greater potential returns, but also higher risk and potential losses. A haircut can lower the amount an individual can borrow from a lender, reducing their leverage and risk exposure.

: “Getting a haircut” can impact the liquidity of lenders and borrowers. 

 refers to the ease and speed of accessing cash or cash equivalents. Having more liquidity means more flexibility and adaptability, but lower returns. When a lender imposes a haircut, they require the borrower to provide more collateral than the loan amount, which reduces the lender's liquidity. Similarly, the borrower has to pledge more assets than the loan amount, which reduces their liquidity.

: Collateralization means using an asset to secure a loan in the event of a borrower's default. If collateralization is higher, it provides more security for the lender, but can also result in lower availability and higher costs for borrowers. A haircut can increase collateralization because it requires more assets to be pledged as collateral than the loan amount.

To illustrate how haircuts work in finance, let's look at some examples of haircuts in different scenarios central banks and markets.

, financial institutions exchange securities for cash with a promise to repurchase them later. This is a way for them to borrow and lend short-term funds, using the securities as collateral. The securities used as collateral are subject to haircuts that vary, depending on their type and quality. Treasury bills, considered safe and liquid, may have a haircut of 

, while riskier and less liquid corporate bonds typically have higher haircuts.

 is a method whereby traders borrow funds to buy or sell securities or derivatives. This approach allows them to increase their potential profits, but also increases their potential losses. The securities or derivatives used as collateral in margin trading are subject to haircuts, based on their volatility and liquidity. Highly volatile and liquid stocks may have a 

 or higher haircut, while less volatile and liquid futures contracts may have lower haircuts.

: Debt restructuring allows a borrower and lender to agree to change the conditions of an existing debt contract. This measure is typically taken to prevent the borrower from defaulting or going bankrupt. The agreement’s details depend upon both parties' financial status and negotiation strength. For example, Greece, which faced a 

 crisis in 2012, agreed to restructure its debt with its private creditors by imposing a 

The Impact of Haircuts on Financial Stability

The financial stability of a market is integral to its functioning smoothly and efficiently without disruptions or crises. It requires a combination of transparency, regulation, supervision and coordination among financial institutions and authorities. Depending upon their size and application, haircuts — or the difference between the market value and the loan amount — can impact financial stability positively or negatively. 

On the one hand, haircuts can reduce systemic risk by limiting the exposure of financial institutions to each other. This prevents the failure or distress of one institution or market from spreading to other parts of the system, potentially causing widespread damage. For example, financial instability can potentially be avoided by applying appropriate haircuts to collateralized loans or transactions. 

On the other hand, haircuts can be detrimental to financial stability if they create procyclical effects that amplify business cycle fluctuations in market prices. During a market downturn, haircuts may be increased to protect lenders from losses. This adjustment could force borrowers to sell more assets to meet their margin calls or repay their loans, leading to a downward spiral that may result in a liquidity crunch, credit crunch or fire sale. The size and application of haircuts must be carefully considered to ensure that they promote financial stability rather than undermine it.

In finance, the term “haircut” can have multiple meanings, but it usually refers to a reduction in the value of an asset. This discount is used by lenders fee market makers and borrowers as a risk management tool, especially when assets are used as collateral for loans or transactions. A haircut can also refer to either a market maker's fee, a margin requirement or the amount that bonds are discounted during a debt restructuring process.

Haircuts impact the amount of available assets that can be pledged to secure loans, or government bonds, which can affect collateralization, leverage and liquidity in a broader financial system. Be sure to understand any haircuts applied to your tradeable capital before you trade.

'Haircut’ in Finance: What Does it Mean?

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'Haircut’ in Finance: What Does it Mean?

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Compete for 2,500 USDT USDT Every Week

Grab Up to 5,000 USDT in Rewards