Reading BTC and ETH Derivatives Signals After a Selloff

Summary

This weekly market note describes how a prolonged period of sideways spot trading coincided with changes in crypto derivatives. It reports that futures yields fell to their lowest levels of the year so far and that BTC funding remained below its mid-January highs. ETH funding turned sharply negative during the February 3 selloff before returning to neutral. Short-dated volatility smiles, previously tilted toward out-of-the-money puts, shifted toward a premium for out-of-the-money calls.

The note compares BTC and ETH options signals: BTC’s implied-volatility term structure is described as steep, while ETH’s remains relatively flat. Both assets’ short-tenor risk reversals are said to have moved back toward calls as sentiment recovered. These observations can help readers track positioning and perceived tail risk through funding, futures yields, term structure, and skew. The document supplies no chart values, trade rules, forecasts, or performance evidence, and it cautions that market commentary is time-sensitive and informational rather than investment advice.

Key ideas

• The report links choppy spot trading with lower futures yields and subdued BTC funding.
• ETH funding became sharply negative during the February 3 selloff, then returned to a neutral level.
• Short-dated BTC and ETH volatility skew shifted from puts toward calls as sentiment recovered.
• BTC’s implied-volatility term structure was steeper than ETH’s during the period described.
• The observations are a dated market snapshot and do not establish a trading strategy or forecast.

Tags

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