Options Dominate Crypto Derivatives Market as Options Volume Surpasses Futures

The Bitcoin derivatives market has undergone significant changes in recent years. One of the most notable shifts is the growing importance of options, which now account for nearly half of total notional open interest across Bitcoin derivatives. This represents a structural change in crypto trading since the asset class went institutional.

A joint report from Glassnode and Bybit titled 'The State of Crypto Derivatives' highlights this transformation. According to the report, 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 are perpetual futures for directional bets and options for everything else.

Perpetual futures have become a better fit for a market that trades 24/7 and doesn't operate on quarterly cycles. Options, meanwhile, gained market share in four out of five distinct market regimes since 2019. The most aggressive expansion happened during prolonged bear markets, where the ability to buy downside protection or structure event-specific trades becomes more valuable.

The report also tracks competitive dynamics among exchanges and finds that Bybit has made significant gains in this area. Bybit now holds a 28% market share of Bitcoin options volume across four tracked venues, up from under 10% when it first launched options trading. The exchange's options open interest has grown from $529 million to $2.33 billion.