A new Crypto Derivatives Analytics Report from Bybit, produced in collaboration with Block Scholes, finds tentative but tangible signs that cryptocurrency market sentiment is beginning to recover after a turbulent opening to December. The analysis, which looks at derivatives flows and risk indicators in the wake of December 1’s sharp selloff, paints a picture of cautious optimism: traders are stepping back into the market, but remain far from outright bullish.
The selloff on December 1, triggered by hawkish signals from the Bank of Japan, pushed major tokens lower, but the report notes that Bitcoin has since climbed to a two-week high above $93,000 and Ethereum has reclaimed the psychological $3,000 level. Those price moves have been supported by positive catalysts, including Vanguard’s move to open its platform to crypto ETF and mutual fund trading, yet derivatives data show participants are still pricing in caution because large parts of the market remain significantly below their all-time highs.
“Cryptocurrencies have been buffeted by multiple crosswinds, from shifting expectations surrounding major central bank policies to mounting concerns over the viability of DATs,” said Han Tan, Chief Market Analyst at Bybit Learn. He added that the market is likely to stay sensitive to macro forces in the immediate term, particularly with a pivotal Federal Reserve interest-rate decision looming and lingering aftershocks from the October 10 liquidation event.
From Panic to Pause
Derivatives metrics highlight the guarded tone among traders. Options markets have seen a marked reduction in bearish bets: put-call skew premiums, which were running between 10 and 13 percentage points at the start of the month, have narrowed to roughly 2–4 percentage points. That shift suggests traders are demanding far less insurance against a crash than they were only a week ago.
At the same time, open interest in perpetual futures has risen only modestly during the recovery and remains well below the levels seen before the mid-October turmoil, indicating muted leverage activity and lower participation in aggressively leveraged positions. Notably, the recent selloffs did not trigger the sort of liquidation cascades associated with an overleveraged market.
Block Scholes’ proprietary Risk Appetite Index echoes the mixed picture: appetite is creeping in a positive direction, but market participants have not yet turned firmly bullish. That cautious stance is understandable, the analysts say, because both Bitcoin and Ethereum are still trading a long way from their respective peaks.
The report also draws attention to a standout performer amid the broader recovery: Basic Attention Token. BAT has surged more than 100 percent since October 11 to roughly $0.27, markedly outpacing the rest of the altcoin market. The Ethereum-based token, which fuels Brave browser’s privacy-focused advertising network that serves over 100 million monthly users, has helped social tokens become the second-best performing sector over the past month, behind only privacy coins.
While the snapshot in the report is upbeat about the nascent recovery, its authors caution that the path forward remains closely tied to macroeconomic developments and liquidity decisions by central banks. Traders appear willing to re-engage with the market, but many are doing so with risk controls in place rather than a return to unchecked risk-taking. For readers who want the granular derivatives charts, open interest breakdowns and the full methodology behind the Risk Appetite Index, the report is available for download from Bybit.
Bybit, founded in 2018 and now the world’s second-largest cryptocurrency exchange by trading volume, serves more than 70 million users globally. The exchange positions itself as a bridge between TradFi and DeFi, focusing on Web3 infrastructure, secure custody, diverse marketplaces and tools aimed at enabling builders and enthusiasts to participate in the decentralized economy.
