94,237 – that’s the number of BTC options contracts that vanished from open interest in the last nine trading sessions. Snooze-fest on the surface, but stick with me.
Here's What Actually Happened
From where we sit on the desk, this week’s lull felt scripted. Bitcoin rockets through $108,000, the headlines scream “new paradigm,” and then – poof – options volumes dry up by roughly 38% on Deribit and nearly 42% on CME. If you traded the 2020 post-halving summer you’ll remember the same pattern: price melt-up, implied vols puke, and traders swap their terminals for sunscreen.
I pulled up Genesis Volatility this morning and the 30-day at-the-money (ATM) IV print was 48%, down from a spicy 71% just three weeks ago. That’s a bigger collapse than we saw after the April ETF approval rumor fizzled. In my experience, when IV collapses this hard while spot stays bid, somebody bigger than us is financing carry trades – classic whale behavior.
Why the Options Market Looks Half-Asleep
Now here’s the interesting part: skew hasn’t followed IV down. The 25-delta put-call skew still clings to -6%. Translation – traders are under-hedged on the downside but refuse to dump calls. I think that tells you they’re expecting one more face-melter higher, but they’re not coughing up for rich premium until the market forces them.
Quick war story: back in July ’22, we saw a similar pattern. Our desk was running a short-dated risk-reversal – long 10-day 5% OTM calls, short the puts – funding the structure with mid-curve gamma. Vol drifted into the abyss for three weeks and then Powell sneezed at Jackson Hole; BTC cratered 11% in 36 hours. If you weren’t long some tail risk, you were toast.
Side Note – ETH Isn't Playing Along
Tangential thought while I’ve got you: ETH vols are holding up better, sitting at 55% ATM. That divergence usually front-runs one of two things – a merge-level catalyst (not on the horizon) or ETH lag that catches up in a hurry. Keep one eye on the ETH/BTC ratio; a break above 0.065 would tell me the capital rotation game is on.
So Who's Selling the Gamma?
Late Monday we spotted two chunky prints: 2,000x Jun 28 110K calls sold at 1,625 vol and 1,500x Jun 28 95K puts bought at 1,420 vol. Shout-out to @Amberdesk who flagged the block tape before it hit Paradigm. My read? A basis desk is funding a protective floor by offloading upside they don’t believe in short-term. That fits with Bitfinex whale wallets that shifted 5,800 BTC onto exchange – not a dump, just ammo if they need to cap price.
Why This Matters for Your Portfolio
If you’re purely spot, you probably shrugged at that options chatter. But compressed IV plus elevated skew is a cocktail for cheap stables-for-yield vaults. I’m already layering short strangles around 95K/120K for July, delta-hedged every 4% move. At 48% IV, that’s a 2.1% weekly theta bleed in USD terms – not bad beach money.
Retail tends to chase breakouts and ignore vol. Don’t be that guy. In my experience, the summer doldrums lull you into thinking moves are over. Then a macro headline – think CPI print or another ETF filing – detonates IV like a coiled spring. The folks who bottled cheap vol today will be the ones selling it back to you at 90% IV later.
What the Charts Aren't Telling You
Glassnode shows exchange balances down to 12.1% of circulating supply, lowest since 2018. Hodlers aren’t budging – that underpins spot. Meanwhile, funding rates on Binance perpetuals flipped from +37 bps to +11 bps in 48 hours. That’s the leverage bleed we always see when gamblers get margin-called out of FOMO longs. I’ve noticed when funding cools off faster than IV, it usually front-runs a sideways grind rather than an immediate dump.
Okay, Where Do We Go From Here?
“Markets don’t stay quiet for long, they get quiet so the next move hurts more people.” – old prop-desk proverb
Statistically, BTC’s realized volatility in July averages 64% annualized. We’re printing 42% six-day realized right now. Even a reversion to that modest mean implies a 9-10% spot move within two weeks. Direction? The skew says downside risk is underpriced, but on-chain flows say dip buyers are foaming.
My gut – and it’s been wrong before, ask my 2019 alt bag – says we drift between 100K and 115K until the mid-July FOMC. After that, macro will either hand risk assets a green light or yank the punch bowl. If Powell hints at rate cuts, 125K prints before Labor Day. If he doubles down on higher-for-longer, 92K stop-hunts are on deck.
Closing Tape
Bottom line: options traders might be on vacation, but the setup for a volatility renaissance is staring us in the face. IV this cheap doesn’t last, and skew this sticky usually resolves violently. Grab the beach chair with one hand and some gamma with the other.
