Offshore Bitcoin futures crash 97% as traders abandon traditional risk

A strange thing has happened to Bitcoin's derivatives market over the past five years. The market is larger, institutions play a much bigger role, exchanges offer more sophisticated products, and traders have become far better at moving risk around. At the same time, one of the products that helped build that market has almost disappeared from the crypto-native venues where Bitcoin derivatives first took off.

Dated futures volume across the offshore venues tracked by Glassnode is now about 97% below its 2021 level. Options, meanwhile, have expanded from roughly one-quarter of crypto-native Bitcoin derivatives open interest to nearly half, gaining share during four of the five market regimes Glassnode studied since 2019.

It would be easy to describe that as options replacing futures, but that's not really what happened. Bitcoin derivatives have split the old futures market between two products that are better suited to different kinds of risk, with perpetuals becoming the easiest way to make a leveraged directional bet without worrying about expiry, while options take more of the work around hedging, volatility, downside protection, and trades built around a particular price or date.

That division has squeezed dated futures between them.