Bybit and Block Scholes Report Shows Traders Stay Defensive as WLFI Volatility Persists
After October’s $6 billion liquidation, derivatives markets remain cautious while DeFi tokens stir selective risk-taking.
Bybit and Block Scholes’ new analytics report finds that crypto derivatives traders are still defensive after October’s $6 billion wipe-out, with flat open interest, rising options hedging, and lingering volatility in WLFI following its airdrop.
Derivatives Market Cools After Massive Liquidation
The latest Bybit x Block Scholes Crypto Derivatives Analytics Report, details how a $6 billion liquidation on 10 October reshaped sentiment across perpetual swap markets. The sell-off—sparked by renewed U.S.–China trade tensions—triggered widespread deleveraging.
Although diplomatic progress soon followed with a new trade deal, Federal Reserve Chair Jerome Powell’s hawkish tone at the FOMC meeting dampened confidence. Bitcoin (BTC) briefly fell to US $107 000, while short-term put-call skews flipped bearish, revealing renewed risk aversion among traders.
Open Interest Stuck Under $10 Billion
Since that event, notional open interest in perpetual contracts has stagnated below US $10 billion, roughly half its level before the sell-off. Even as U.S. equity indices notch record highs, crypto markets continue to move independently, with BTC and ETH trapped in the US $105 000–115 000 band.
This disconnect suggests that crypto remains insulated from broader risk-on sentiment, reflecting traders’ reluctance to rebuild leverage positions while macro uncertainty persists.
Options Demand Reveals Hedging Bias
In contrast to the lull in perpetuals, BTC options activity is expanding. The report highlights steady growth in open interest, driven by hedging and speculative demand. Elevated at-the-money implied volatility and consistent short-term put buying show traders preparing for further turbulence rather than betting on a breakout.
WLFI Token Swings Keep DeFi Volatile
Meanwhile, DeFi is displaying selective risk appetite. The World Liberty Financial (WLF) protocol’s governance token WLFI jumped 25 percent to $0.15 after an 8.4 million-token airdrop to early adopters. Yet funding rates for WLFI perpetuals remain unstable—evidence that market conviction is still thin despite improved sentiment.
Outlook: Defence Before Direction
Bybit and Block Scholes conclude that derivatives participants are cautiously regaining footing but remain focused on risk management over aggressive exposure. Macro headwinds, from monetary policy shifts to geopolitical friction, continue to steer positioning.
Until open interest rises decisively and funding rates stabilise, crypto’s derivatives market looks set to prioritise preservation over speculation.
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