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

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Crypto

Bitcoin

A Bitcoin mixer is software (or a service) that accepts Bitcoin from multiple users, mixes them so you can’t identify who sent how much, and then sends out different bitcoins to their destinations.

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If you’re familiar with the fundamentals of the 

 blockchain, then you know that it's a public ledger where you can view every transaction along with associated wallet addresses. However, the real-world identities of the wallet holders are hidden. 

Well, not entirely. There are ways to uncover the names of wallet holders. That’s why blockchain addresses are said to be “pseudonymous,” rather than anonymous.

The need for privacy has led to the rise of Bitcoin mixers, also known as Bitcoin tumblers. 

Keep reading to understand what these are, how they hide your financial transactions and identities, whether they’re legal, and the various types of mixing services available. 

A regular Bitcoin transaction works as follows: A user sends coins from their 

 and enter either of the wallet addresses to find out where the coins came from (or who received them), and the amount of BTC transacted. 

Using advanced tools, one can easily find the real-world identity of the persons behind the wallet addresses. With that, all of your transactions can be traced. 

We’ve already established that Bitcoin transactions aren’t hidden. While that’s one of the network’s main selling points, it’s also one of its drawbacks — because some Bitcoin users aren’t comfortable with the fact that anyone can use a Bitcoin explorer to view the entire record of their transactions. 

If you want complete privacy in your crypto dealings, you need a Bitcoin tumbler (or “mixer”). 

A Bitcoin mixer is software (or a service) that accepts Bitcoin from multiple users, mixes them so you can’t identify who sent how much, and then sends out different bitcoins to their destinations. 

If you were to view such a transaction on an explorer, you’d find the address of the mixer as the recipient (in the case of an outgoing transaction from your wallet) instead of a Bitcoin address. Similarly, if you typed in a transaction recipient’s address, and looked to see where the coins came from, all you’d find would be the tumbler’s address. 

It’s called a “mixer” because it mixes your coins with other holders' coins to the point that none of them can be connected back to their original wallet addresses. 

Hence, when you use this solution, you can send Bitcoin or receive it while remaining completely anonymous. 

These anonymous transactions aren’t always free. Some of these Bitcoin tumblers require you to pay service fees for mixing your coins. 

There are two main categories of Bitcoin mixers — centralized and decentralized — and they work differently from each other. 

Overall, tumblers work by collecting Bitcoin from multiple users and combining their transactions — or, to use a metaphor, “putting all the coins in one big box and mixing them” so you can’t trace their origin, and then sending the coins to their various destinations. 

Now, let’s get into the specifics of how each method works after reviewing the two types of mixers. We’ll explain using a somewhat simplified version of the actual process. 

Centralized Mixers vs. Decentralized Mixers

The purpose of a Bitcoin tumbler is to disrupt the link between your real-world identity and your crypto wallet address. Doing so adds anonymity to your crypto transactions. 

Centralized Bitcoin mixers are privately-owned software or services that mix your coins for you. 

 is one of the most popular centralized Bitcoin mixers.

To use a centralized Bitcoin tumbling service, you send your Bitcoin to a specified address (the mixer’s address) instead of directly to your recipient. 

There’s usually a form on such tumblers that you fill out where you specify the recipient’s wallet address or your destination address. 

After you send Bitcoin to the mixer and pay their service fee, they add your coins to a pool and mix them with other users’ coins. Then they send fresh coins to the destination addresses. 

Decentralized Bitcoin tumblers require multiple users to contribute to a single large transaction. As a peer-to-peer protocol, decentralized mixers are permissionless and borderless. 

Here, the Bitcoin tumbling process is automatic. Protocols like 

 are two of the most well-known decentralized mixers.

When you make a transaction using a decentralized mixer, it becomes part of a larger transaction with multiple participants, all sending their bitcoins to another address. 

Of course, this mixes everyone's coins. The same number of bitcoins will arrive in your destination wallet after a specific period, but you’ll almost certainly not receive the same bitcoins you put in. 

The upside to using decentralized Bitcoin blenders is that you usually pay lower service fees (since the mixing process is automated). For example, the service fee of centralized mixer 

 for mixing of more than 0.01 BTC (mixing less than 0.01 BTC requires no service fee). 

The biggest benefit of using a Bitcoin mixing service is enhanced privacy of transactions and anonymity. They help you keep a low profile while dealing with cryptocurrency. However, it has quite a few drawbacks.

The primary drawback of nearly all Bitcoin mixers is that you often have to delay the transaction from the mixer to your destination address. This is done in order to make Bitcoin analysis much harder, even for keen observers. (There’s usually an option to adjust the duration of the delay.) 

Although delays aren’t a requirement, they are preferred, as they increase the gap between input and output and, therefore, the difficulty of finding the transactions. 

The ability to obfuscate crypto transactions also makes Bitcoin mixers a target for regulators — and a hotbed for money laundering. That’s why some exchanges consider mixed coins tainted, and don’t allow or restrict the transactions on their platforms. 

The biggest con of a centralized Bitcoin tumbler is that there’s a single point of failure, since it’s run by one entity. 

If the network shuts down for any reason, then you’ll lose all your funds that were in process. Even if the network doesn’t shut down, there could be the risk of a hacker — or even the centralized mixer stealing your funds.

In addition, since some centralized mixers privately save both your input and output Bitcoin addresses, you risk losing anonymity if the centralized network shares your information for any reason. 

A major downside of decentralized mixers is that they need many members to mix coins, lest your transactions be traced back to you through the process of elimination. 

Bitcoin mixers, and crypto mixers in general, aren’t illegal. However, these solutions are occasionally associated with money laundering and other illegal activities. This has led to shutdowns by the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) and other agencies. A few of these events are mentioned below.

In late 2021, the ex-CEO of the Bitcoin mixer Helix admitted that he had 

, another Bitcoin mixing service, was also involved in a money laundering conspiracy, though its alleged operator claimed innocence.

, which operated on the Ethereum blockchain, was 

 on Aug. 8, 2022, because the mixer had been used to launder over $7 billion worth of virtual currency. 

If you don’t want to use coin mixing services, there are other ways to hide your crypto transactions. Three of these are listed below. 

, a Layer 2 scaling solution for Bitcoin, not only allows more transactions to be processed but also 

. It does so by grouping transactions together, making it difficult to trace individual transactions.

 obscures the spending of BCH and makes transactions difficult to track through its CashFusion privacy tool.

 (ZEC) are also good options for making anonymous transactions. These coins use special privacy technologies, such as shielded addresses, that can hide the transactions of the coin in the blockchain. 

 to maintain privacy. It works by combining signatures across numerous signers to hide the true sender of a message. Hence, the recipient won’t know which signature belongs to the sender.

However, take note that privacy coins aren’t legal everywhere. Several countries, including South Korea, Australia and Japan have 

 on their use or banned them entirely, and crypto exchanges no longer list them in those regions. 

Sign up with Bybit now to trade Bitcoin, Bitcoin Cash, Monero or Zcash!

Coin mixing services and Bitcoin tumblers allow you to make Bitcoin transactions anonymously. However, this has led to illegal activities and criminal use, so governments are cracking down on them. Lightning Network might be a safer method to ensure privacy for your Bitcoin transactions. Alternatively, you can consider investing in Bitcoin Cash, or in privacy coins like Monero and Zcash.

If you’re still interested in using cryptocurrency mixers, then make sure to choose one that follows the legal guidelines of the local government so that you don’t accidentally flout the law.

What Is a Bitcoin Mixer – And How Does It Work?

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