The cryptocurrency market has entered a markedly lower-volatility phase, with industry participants pointing to structural changes driven by institutional adoption and the growing use of derivatives.
Sidrah Fariq, head of retail sales at Deribit, said bitcoin’s (CRYPTO:BTC) implied volatility, measured by the BTC DVOL index, has stayed below 100 since 2022 despite bitcoin reaching fresh all-time highs.
The sustained decline in volatility is widely viewed as a sign of market maturation following years of sharp price swings and speculative excess.
Market observers note that bitcoin’s rally after the approval of spot bitcoin exchange-traded funds in January 2024 played a key role in reshaping trading behaviour.
The ETF approvals opened the door for traditional financial institutions to gain exposure to bitcoin through regulated products rather than direct spot market participation.
“Bitcoin’s surge and the January 2024 ETF approvals brought in broader institutional adoption by enabling institutions to gain Bitcoin exposure through regulated investment vehicles and traditional brokerage firms such as BlackRock,” Fariq said.
Centralised crypto exchanges have responded by expanding their derivatives offerings to meet the changing needs of both professional and retail traders.
Deribit has seen the institutional share of its business rise from 80% to 85% over the past three years, a trend Fariq said reflects rising sophistication among market participants.
Despite this growth, crypto options account for only around 2.8% of the total crypto derivatives market, leaving substantial room for expansion.
Deribit currently controls roughly 85% of global crypto options open interest, underlining its dominant position in a still-nascent sector.
Augustine Fan, partner and chief financial officer at Signalplus, said crypto options remain significantly underdeveloped compared with futures markets.
“Crypto options are still in the very early stages compared to futures, and can be proxied with their traded volumes versus futures across crypto and traditional equities, where equity options have already matched or surpassed futures,” Fan said.
Both executives highlighted record options trading activity during major market moves as evidence of growing interest and future potential.
To attract new participants, Deribit is running educational initiatives and incentive programmes, including a trading competition with a $450,000 USDC prize pool in partnership with Signalplus.
The competition is designed to provide beginners with practical tools and education to better understand options trading mechanics.
On regulation, both experts said progress is being made as crypto frameworks increasingly align with traditional finance standards.
“They must be comfortable with custody, client onboarding rules, money transfers, capital requirements, audits, and security across the ecosystem,” Fariq said.
Regulatory developments such as the EU’s MiCA framework, the GENIUS Act in the United States and the Travel Rule were cited as positive steps.
However, lingering regulatory uncertainty continues to limit broader institutional participation in crypto derivatives markets.
Looking ahead, Fan said crypto options are likely to become a core trading instrument for both retail and institutional investors.
“We expect to see listed options available for all the major tokens at the time, supported by deep and liquid volatility curves and a global network of automated market makers,” Fan said.
At the time of reporting, Bitcoin price was $90,393.23.