Perp Open Interest Backs Recent BTC Rebound, But Options Still Bearish

While BTC previously traded in a tight range, the low level of realized volatility broke this week when the price briefly fell to $62K.

The move coincided with a weakening in risk appetite across broader markets, and options pricing responded quickly with a strong increase in demand for downside protection. 

However, a sharp correction back to the $68K levels at the time of writing, after a brief stint at the $70k handle, lost in the sell-off has not seen the same response in volatility markets. 

While the skew of volatility smiles towards OTM puts has recovered, the snap back higher did not see ATM implied volatility levels jump to the same extremes. While traders are now pricing in larger near-term moves, with one-week implied volatility jumping, the front end of the volatility curve is only mildly inverted.