Crypto Options Signals from the February 2025 Selloff

Summary

This weekly market note compares BTC and ETH derivatives behavior during a sharp crypto spot selloff. It reports that ETH and altcoins fell harder than BTC, alongside a larger volatility premium for ETH and a more deeply inverted ETH volatility term structure. BTC’s term structure is described as flattening at the front end rather than inverting to the same degree.

Short-dated options smiles for both assets shifted toward out-of-the-money puts, consistent with bearish sentiment and demand for downside exposure. By contrast, expiries beyond one month remained tilted toward out-of-the-money calls. The report also notes that BTC perpetual funding did not turn negative during the latest selloff, while ETH funding did not reach the lows seen in the February 3 episode. These are descriptive observations, not a tested trading strategy or causal explanation. The document supplies no numerical chart readings beyond its comparisons, and its third-party research disclaimer cautions that the analysis may be incomplete, time-sensitive and unsuitable as investment advice.

Key ideas

• ETH showed a stronger volatility premium and a deeper term structure inversion than BTC during the reported selloff.
• Short-dated BTC and ETH options skewed toward out-of-the-money puts.
• Options beyond one month remained skewed toward out-of-the-money calls.
• BTC perpetual funding stayed nonnegative during the selloff described in the report.
• The market commentary is a snapshot and does not establish a profitable trading signal.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.