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

Trading

The invisible hand is an economic theory that states the market will automatically adjust to meet the needs of the public. Learn more about it here.

Does it ever seem like financial markets move with no discernible rhyme or reason? Though some market fluctuations are random, others have a hidden logic to them. Many events can be explained through the economic theory of "the invisible hand,” a term originally coined to explain why capitalists might occasionally make decisions that benefit society as a whole. However, it also has some surprising applications for investments and crypto markets. To learn what the invisible hand is — and why it matters to you — we present this helpful guide.

The invisible hand is an economic theory that states the market will automatically adjust to meet the needs of the public. In crypto trades, it means prices will naturally reach an equilibrium that suits both buyers and sellers.

To fully understand the concept of the invisible hand, we need to look at the theory that gave birth to it. The original concept dates back 

 published by economist Adam Smith. In it, Smith states that even though every individual in the market is acting in their own self-interest, all of these separate actions combine to create a capitalist society that benefits the entire nation and prevents a financial crisis. For example, renters want to pay the lowest possible price for rent, while landlords want to charge the highest possible price. All of these forces will create an "invisible hand" that keeps rent from being either too high or too low.

This theory was created centuries ago, but it still has many applications for modern financial markets and crypto investors. It essentially describes the way a free market economic system can be influenced without apparent factors. Even if a government isn’t officially setting prices, everyone can come to an agreement about how much a certain asset is worth. 

As crypto purchasers, sellers and creators work to satisfy their own needs, each one’s individual self-interest can create a system that works well for everyone.

The invisible hand provides a useful model for conceptualizing changes to the crypto market. Instead of seeing market fluctuations as completely random, it allows people to consider underlying causes. And from a more philosophical viewpoint, this can be a useful way for investors to remain calm and logical about market fluctuations. Instead of panicking the second that prices 

, investors can recognize that the system is a free market, one which will inevitably adjust to accommodate the individual self-interests of its users.

On an even more practical level, the invisible hand model is important because understanding crypto markets is often the first step to predicting them. Investors can use economic theory to analyze the way crypto exchanges move, and to consider what will happen next. By considering how their own self-interest and other people's choices will impact the market, investors can try to predict what will happen next.

How Does the Invisible Hand Affect the Crypto Market?

The invisible hand is constantly impacting the prices of crypto. Keep in mind that this complex economic theory covers a lot more than just simple 

. Instead, it refers to all of the various factors that end up influencing the free market. 

For crypto, the invisible hand can include everything from computer processor prices to internet memes. Any time prices rise or fall without direct influence from regulators, the invisible hand is at work. Taking a look at some of the most notable examples of the invisible hand theory in crypto can show the many ways in which this concept affects the market.

 show the effect of the invisible hand. Recently, investors have speculated on market prices by purchasing 

 gives you the right to buy crypto at a certain strike price, providing profit if BTC prices rise. In order to actually supply the crypto for this contract, a market maker must step in to provide the necessary tokens. However, when investors are focused entirely on calls, market makers end up in a negative feedback loop that pushes crypto prices higher and higher.

Fortunately, the invisible hand steps in to prevent overvalued crypto. The tremendous fluctuations in crypto prices increase the price of options themselves, and purchasers start to worry that Bitcoin prices can’t rise any higher. Ultimately, the increased risk and price combine to calm option purchases, and market forces encourage Bitcoin prices to decline. In this way, the invisible hand has intervened to help stabilize Bitcoin prices.

Since Ethereum is so frequently used as the base for other DeFi projects, there are a lot of different ways in which users' needs can impact the market. For instance, consider the 2022 

 project, from Yuga Labs. During this hotly anticipated NFT launch, investors noticed an unfortunate side effect: Due to the way Ethereum is set up, increased market activity leads to higher 

. Users had to pay a premium to ensure their transactions actually went through, and a total of

This resulted in a lot of backlash and controversy, with Yuga Labs 

 to entirely change the way they mint NFTs. Other innovators took note of the problem as well, and have subsequently announced plans to create their own blockchains instead of building on Ethereum. 

Ultimately, the Ethereum community was encouraged to moderate activity and design new projects in a way that won't excessively impact gas fees. This situation highlights the fact that the invisible hand can encourage progress without requiring outside regulators to get involved.

The most common way that the invisible hand affects cryptocurrencies is through prices. When a popular coin's price starts to drop, users buy up a lot of coins and push the price right back up. Meanwhile, when a crypto's price spikes, fears about market instability tend to drive prices back down. Thanks to the invisible hand, crypto prices remain fairly stable.

The invisible hand also impacts regulation for other crypto participants, such as exchanges. Despite fears that unregulated crypto exchanges could cause a financial crisis, many nations have demonstrated that the invisible hand still encourages highly effective self-regulation.

Ultimately, the concept of the invisible hand created by Adam Smith is a highly useful tool for crypto investors. Though no single economic theory can fully summarize cryptocurrency markets, the invisible hand theory does help to explain why cryptos often settle at certain price points, and how markets can regulate themselves. By recognizing the way market forces impact the free market economic system, we gain a better understanding of crypto markets, enhancing our ability to predict certain recurring patterns.

The Invisible Hand: How It Affects the Crypto Market

Grab Up to 5,000 USDT in Rewards

Grab Up to 5,000 USDT in Rewards