Bybit Report: Fed Rate Cut Fails to Spark Crypto Derivatives Optimism, Traders Remain Cautious

Bybit, in collaboration with analytics firm Block Scholes, has released a Crypto Derivatives Analytics Report revealing that sentiment in cryptocurrency derivatives markets remains subdued despite the Federal Reserve's latest policy move. The report analyzes market conditions surrounding the final Federal Open Market Committee (FOMC) meeting of 2025, where policymakers implemented a widely anticipated 25 basis point interest rate cut.

Chair Jerome Powell's remarks left the door open for either a pause or another potential cut in January 2026. However, this monetary policy shift elicited only a "restrained response" across cryptocurrency markets, in stark contrast to global equities which surged to new record highs. The report highlights several key indicators of persistent caution.

In perpetual swap markets, open interest remains far below pre-October 10 levels, and funding rates in leveraged contracts suggest retail traders are still unwilling to re-enter positions. This indicates minimal shifts in perpetual swap activity and a lack of appetite to re-engage with leverage.

Options markets paint an even clearer picture of bearish sentiment. Volatility smiles are bearish across the entire term structure for both Bitcoin (BTC) and Ethereum (ETH). The analysis shows volatility smiles are pricing in a close to 5% premium for out-of-the-money (OTM) puts over calls for both short-dated and long-dated BTC and ETH options. This pricing indicates traders are actively seeking and paying for downside protection.

The report notes that Bitcoin's spot price remains 28% below its all-time high, and options markets continue to price in meaningful downside risk. "Those waiting for a so-called Santa rally may end up disappointed, at least based on current positioning in derivatives markets," the analysis states. It concludes that current positioning suggests a tempered outlook for any year-end rebound, with the window for a crypto rally narrowing and the bar set notably higher.

Han Tan, Chief Market Analyst at Bybit Learn, commented on the broader implications: "The Fed’s policy outlook will frame market reactions to this week’s US jobs report and inflation data releases. Crypto bulls still have their work cut out to get any upside momentum going, considering that digital assets could only muster a tepid response to the final FOMC meeting of 2025." He emphasized that the broader macro backdrop continues to heavily influence crypto market reactions, and traders have yet to see catalysts strong enough to support a late-year resurgence.