Our weekly crypto derivatives analytics report delves into macro events, the current state of crypto and trading signals from spot trading volume, and futures, options and perpetual contracts.

December's end-of-year options expiration brought an unexpected drop as realized volatility fell to the lowest levels of the month. Perpetual swap open interest remained stable, indicating these markets weren't heavily used for hedging against expired options, likely contributing to the muted volatility. 

While most expired open interest in Bitcoin (BTC) and Ethereum (ETH) hasn't been reinvested, the balance of calls and puts remains consistent. Notably, ETH options are pricing in higher implied volatility as compared to BTC, particularly for shorter expirations, leading to a flat term structure for ETH, while BTC is offering cheaper options exposure.

In the perpetual markets, low volatility and minimal spot movements have led funding rates for nearly all tokens to mirror broader market sentiment throughout the holiday season. On the options side, BTC's term structure is noticeably lower and steeper than ETH's, with realized volatility now dipping below implied volatility levels, highlighting an intriguing shift in market dynamics.

Please check out the report’s highlights.

Open Interest Solid Amid Year-End Options Expiration

Although open interest for both BTC and ETH perpetual swaps hasn’t returned to early December 2024 highs, it remained robust throughout the significant end-of-year options expiration event. This suggests that these markets weren’t heavily utilized to 

 of the expiring options contracts, likely contributing to the lack of volatility observed during this period. Instead, trading volumes have dipped noticeably during the winter holiday season, coinciding with a collapse in realized volatility back to December 2024’s lowest levels.

BTC Option Curve Remains Steep During Call-Put Parity

The expiration of December's end-of-year options didn’t trigger the anticipated surge in volatility; instead, realized volatility has plummeted to the lower end of its recent range. The implied volatility term structure remains steep compared to both its recent behavior and ETH's, with longer-dated implied volatility around 57%, and 1-week at-the-money options trading about five points lower. Much of the expired open interest hasn’t yet been rolled into new positions, maintaining a neutral balance between puts and calls. Consequently, BTC's options market positioning is relatively neutral, lacking the leverage it had at the start of December 2024.

Huge ETH Option Expiring Doesn’t Cause Volatility

A late December spike in realized volatility didn’t carry into the new year, with ETH’s spot price currently exhibiting volatility below that of short-tenor implied volatility. Interestingly, the implied volatility term structure has undergone a steepening and re-flattening over the past week, contrasting with BTC’s slightly steeper profile. This suggests that ETH’s options market is anticipating higher short-term volatility in spot price movements. 

Despite the significant expiration of options open interest at the end of December 2024, which didn’t lead to a rollover into later expirations, call options continue to dominate the market and have increased at the start of 2025.

Advanced

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Bybit X Block Scholes Crypto Derivatives Analytics Report (Jan 2, 2025): BTC Options Continue to See Call-Put Parity, With Lower Short-Term Volatility Expected

Dive into FLock, a decentralized platform that revolutionizes the way AI models are developed, trained and deployed.

Artificial intelligence (AI) is poised to transform countless industries, but its development often raises questions about privacy, control and inclusivity. 

 is a unique decentralized platform that democratizes AI training, fine-tuning and inferencing. With its blockchain-powered infrastructure, FLock ensures transparency, security and community-driven decision-making, paving the way for AI models that align with established societal values. 

In this article, we’ll explore how FLock decentralizes AI training, its key features and its potential impact on developers, communities and users.

 platform that revolutionizes the way AI models are developed, trained and deployed. By leveraging blockchain technology and a novel approach called 

, FLock addresses critical issues in AI development, such as centralized control, lack of transparency and privacy concerns.

At its core, FLock’s mission is to democratize AI by enabling communities to participate directly in the creation and refinement of AI models. Through federated learning, FLock trains AI models across multiple decentralized devices or servers. This method ensures that data remains local, eliminating the need for raw data exchange while still enabling robust model training. By decentralizing the training process, FLock not only protects individual privacy, but also fosters a more inclusive ecosystem in which diverse contributors can collaborate.

What sets FLock apart is its integration of 

. This ensures that all contributions — whether data, compute power or feedback — are transparently recorded and fairly rewarded. Blockchain tech’s immutable ledger enhances trust among participants and safeguards the process against manipulation. Additionally, the platform’s on-chain incentive mechanisms encourage participation from a wide range of contributors, ensuring that rewards are distributed equitably.

Ultimately, FLock empowers communities to develop bespoke AI models tailored to their specific needs. By decentralizing the process and prioritizing transparency and collaboration, FLock breaks the monopoly of large corporations, creating an AI ecosystem that aligns with public ethics and societal values.

, an Oxford alumnus with a robust background in AI and blockchain technology. Sun, who serves as FLock's CEO, has an impressive career trajectory, having worked as the Director of AI for the Royal Bank of Canada and as an AI Research Fellow at Imperial College London. His vision for FLock stems from a deep understanding of both the technical and ethical challenges of AI development.

The founding team also includes other Oxford alumni, boasting over a decade of combined experience in AI research and the cryptocurrency industry. This team brings a collective blend of academic excellence and practical expertise that positions FLock to lead the decentralized AI movement.

FLock has successfully raised $11 million in funding across two rounds, reflecting strong investor confidence in its vision. In May 2024, FLock secured a $6 million seed round co-led by Lightspeed Faction and Tagus Capital, with additional backing from Digital Currency Group (DCG), Volt Capital, OKX Ventures and Inception Capital.

Later, in December 2024, FLock announced a $3 million successful funding round led by DCG and joined by prominent names like Animoca Brands, Fenbushi Capital, GnosisVC and GSR. These investments are being channelled into enhancing the platform’s testnet and federated learning client, accelerating FLock’s mission of enabling secure, collaborative AI development.

With this funding and over 1,500 nodes contributing from platforms like Numerai and Kaggle, FLock is rapidly scaling its impact on decentralized AI training.

FLock AI revolutionizes AI development through its decentralized training framework. This approach allows participants to contribute to AI model training without ever sharing their personal data. Instead, models are trained locally across devices using federated learning, which ensures that data remains with its owners while still enhancing the accuracy of the model overall. 

FLock’s reward system is designed to incentivize active participation. Contributors who provide data, computational power and/or feedback are compensated with FLOCK tokens, ensuring a fair distribution of rewards. 

FLock empowers its community through a robust governance framework. Decisions regarding AI model development, deployment and ethical considerations are driven by the community, ensuring alignment with established societal values. Through blockchain-based voting mechanisms, contributors can influence the direction of AI projects, fostering transparency and public accountability. 

FLock’s modular architecture allows contributors to participate in specific aspects of AI model development. Whether providing raw data or computational power or even refining algorithms, the platform enables a collaborative and scalable development process. 

At the core of FLock’s philosophy is its commitment to privacy and security. By leveraging blockchain technology, the platform ensures that no single entity controls the AI development process. Data remains local and protected by cryptographic measures, while the immutability of blockchain guarantees transparency in every transaction and model update. 

 begins with a blockchain and an AI layer.

The blockchain layer underpins FLock’s incentivization and security mechanisms.

The AI layer facilitates model training, refinement and deployment, leveraging both centralized and federated approaches.

Let’s have a look at the supply and demand for the FLOCK token.

FLock adopts a 1:2 ratio model between team/investors (33.3%) and community (66.7%), prioritizing community-driven growth and ecosystem expansion. The majority of tokens are allocated to incentivize user participation and long-term ecosystem success.

FLock aims to improve the future of AI development by decentralizing the training process and ensuring transparency, privacy and inclusivity. By leveraging blockchain and federated learning, FLock empowers communities to contribute to AI creation without compromising on privacy. Its innovative reward system and community-driven governance foster a fair and collaborative ecosystem. 

With significant backing and a growing network of contributors, FLock is positioning itself as a leader in decentralized AI, offering a more ethical and secure alternative to traditional AI development models. As it continues to scale, FLock is set to transform the way AI models are built and deployed.

 — and earn a share of a 10 million FLOCK prize pool. For more details, visit 

Intermediate

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FLock AI: Decentralized AI Training

In this tutorial, we’ll explore how you can complete a series of tasks in Network3 for Bybit Web3 Airdrop Arcade.

Task 1: Register for a Network3 Account and Connect Your Bybit Wallet 

: Navigate to the campaign page and click on the 

task. Click on the task, and Galxe will ask to redirect you to the Network3 register page.

: Register for a Network3 account using your email address. You may indicate a 

Task 2: Download the Network3 App and Run a Node for One Hour

 and choose your operating system to download the Network3 app.

 or powerbutton, depending upon which operating system you’re using. For ease of reference, we’ve used macOS and iOS as examples below.

: Keep running the node until the timer reaches 

Beginner

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How to Complete Network3 Tasks for Bybit Web3 Airdrop Arcade

Bybit launched the Bybit Merch Creative Challenge for university students worldwide, offering a $50,000 USDT prize pool.

The S&P 500 dropped 0.22% on Thursday, its fifth straight decline, with investors eyeing Friday’s economic updates. Coindesk Indices, an index measuring broader cryptocurrency market performance was up by 2.03%, with Bitcoin and Ether rising by 2.79% and 2.70%, respectively in the past 24 hours.

Today's top performer is XRP, which surged 1.9% following a rise in price driven by increased open interest and positive market sentiment.

Ripple (XRP), launched in August 2012, is a blockchain technology company focused on improving international payments with its cryptocurrency, XRP. XRP price surged due to increased open interest, a major XRP transfer, and market sentiment linked to Trump's inauguration. Bullish momentum is supported by high short liquidations, with key resistance levels to watch for further price movement.

Check Out the Latest Prices, Charts, and Data of 

 for university students worldwide, offering a $50,000 USDT prize pool. Participants can design exclusive Bybit merchandise, with submissions open until Jan. 15, 2025. Winners will be announced on Feb. 1, 2025, across four prize categories.

Yesterday, Bitcoin Spot ETFs recorded a total inflow of $84.8M, driven by $107.9M from non-GBTC funds, partially offset by a $23.1M outflow from GBTC.

, offering an airdrop for participants who complete tasks like swapping and bridging using the Mango wallet. Points earned through tasks determine airdrop rewards. Join via the Mango wallet and follow steps on the testnet dashboard.

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Bybit Launches $50,000 Merch Design Challenge for University Students Worldwide

Bybit Learn

Crypto

A doom loop is a downward spiral that has been set off by adverse conditions and will lead to other adverse conditions in the future. Learn more here.

Adverse conditions often have ripple effects that can make an already bad situation worse. This holds true at work, in your personal life and even on a broader scale in the economy. In fact, there are procrastination doom loops, urban doom loops and others. The recent

is an example of a major economic doom loop. It developed due to decades of political turmoil coupled with overspending, government responses and several other factors. This type of doom loop scenario may have had many causes, but it also could play a role in the continuation of the doom loop.

A doom loop is a downward spiral that has been set off by adverse conditions and will lead to other adverse conditions in the future. The result is progressively worsening and self-reinforcing events.

It’s easier to understand what a doom loom is by looking at a real-life situation. A great doom loop example is the

was discovered, causing interest rates in that country to skyrocket. As a result, investors

about sovereign debt throughout the E.U. Consequently, lenders raised rates. In some E.U. countries, governments had to respond by reducing spending and taxes. In turn, this further weakened government finances. Credit ratings plummeted and banks were destabilized. In this particular example, the

) stepped in to provide relief and stop the doom loop.

crash, investors get spooked due to factors such as market conditions, government actions or international conflicts. Recently, a doom loop was set in motion by the simultaneity of the war in Ukraine, government actions related to the pandemic, and the U.S. debt crisis. 

In some cases, investors realize that assets are overvalued, which causes a chain reaction of stock sell-offs. Regardless of the reasons for a

crash, it can quickly lead to a doom loop. If this happens, it may seem as though the market is in a free fall. Investors quickly respond to such events by selling their traditional assets and moving to alternative ones that they perceive to be safer.

As we’ve seen, a doom loop scenario is initiated by a combination of factors, but there are several notable causes that require a closer look. The ability to identify these causes as they’re unfolding can help investors prepare for changing market conditions. 

What are the most significant causes of an economic doom loop?

Concern over sovereign debt initiated the Greek debt crisis in 2009, and it more recently spurred the U.S. debt crisis. In response to perceived burdensome levels of debt, governments increase interest rates. This results in reduced consumer spending, a potential stock sell-off in a bear market crash, bank bailouts and, eventually, increased government debt. 

To halt a doom loop, major intervention is often required. In some cases, governments borrow funds and increase taxes to boost revenue. When not done with precision, however, these efforts could perpetuate the doom loop. Outside intervention may be required.

Governments adjust interest rates to optimize economic growth and respond to market conditions that could otherwise lead to a financial crisis. However, as interest rates rise, banks may face increasing stress, because lending rates impact treasury bills and bond yields. An

of this doom loop scenario occurred in 2022, when JPMorgan Chase & Co lost $7.4 billion in a single quarter as the result of rising interest rates. The bank then eliminated a stock buyback plan, which had effects on the stock market and in other key areas. Similar effects of rising interest rates were felt at other banks. Lending tightened, and the impact was felt by businesses and consumers.

How Does a Doom Loop Affect Bitcoin & Other Crypto Prices?

While the recent financial crisis is a great example of a doom loop, it can also have a powerful impact on the crypto world. In times of economic turmoil, investors often look for safer ways to generate a return on their funds. As stock markets crash and other traditional investment avenues deteriorate,

becomes increasingly popular. This can drive up the value of major cryptocurrencies like Bitcoin.

However, a Bitcoin doom loop may not always be positive. Negative effects can occur as the result of something as simple as traditional investment opportunities stabilizing, or new government regulations. Once a Bitcoin doom loop starts, investors begin selling cryptocurrencies at an astonishing rate. This encourages more investors to sell, until the price is far below its peak and many of them have lost assets. 

When a doom loop affects Bitcoin’s price, it has an impact on all active investors. This occurred in 2018 and 2021 when BTC’s price plummeted, and it could happen again. However, a doom loop in traditional financial markets can actually be beneficial for cryptocurrencies because it may spur increased crypto investment activity.

According to Bitcoin expert and former BitMEX CEO

, a potential Bitcoin doom loop is on the horizon. Hayes has predicted that destabilizing global events, including sovereign debt, military conflicts, the pandemic and others, will drive the price of gold to a record high as investors and governments look for new ways to secure their assets and investments. This will result in an increased investment in BTC as well. While a doom loop could have far-reaching and devastating effects on traditional markets, such a scenario could result in financial gains for crypto investors.

A doom loop can be caused by a series of slowly advancing issues or events, or it can develop relatively suddenly. Diligent observers may project a doom loop well before it happens, but some experts may make inaccurate predictions. Action may be taken to thwart a developing doom loop if a situation is identified early on. For example, a governmental monetary agency may slowly raise interest rates to counteract inflation. This must be done with care, however, to avoid perpetuating the doom loop.

A doom loop can’t always be avoided. For example, the doom loop created by the war in Ukraine and government responses to the pandemic was relatively unavoidable. In such situations, investors must closely monitor events and anticipate the potential impact on their investments. While a doom loop isn’t always avoidable, investors can take action to reduce the impact on their finances — or even profit from the situation.

A doom loop has far-reaching, cascading effects that can quickly trickle down to other areas. As a result, its effects can be devastating on many levels. However, an economic doom loop causes investors to look at alternative investment options, such as Bitcoin. When the economy is ailing, a doom loop can create higher BTC prices and profit potential for investors. Identifying the signs of a developing doom loop can help you to position your portfolio accordingly.

How Does a Doom Loop Affect Crypto Prices?

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