bitcoin The market became much calmer in 2025 as institutions adopted derivatives pegged to the leading cryptocurrency to generate additional cash from their dormant coin holdings.
The calm is evident in the steady decline of BTC’s 30-day annualized implied volatility, as measured by Volmex’s BVIV and Deribit’s DVOL indices. These metrics indicate expectations of price volatility over the next four weeks.
Both indices started the year around 70% and end the year around 45%, after reaching a low of 35% in September. This ongoing bearish trend is due to institutions selling call options on top of their spot market holdings to earn yield.
“Us [definitely] “He saw a structural decline in implied BTC volume as more institutional money came in and was happy to get returns by selling options up,” Imran Lakha, founder of Options Insights, said on X.
Options are contracts that give buyers the right, but not the obligation, to buy or sell an asset like bitcoin at a certain price within a deadline. Calls allow buyers to buy the asset at a pre-set price, representing the bullish bet on the market, while puts allow them to sell.
Selling options is similar to selling lottery tickets: you charge an initial premium as a seller, which limits your maximum profit if the option expires worthless. Most options expire worthless, which favors sellers over time.
Deep-pocketed institutions holding BTC or spot bitcoin ETFs have been cashing in on this setup by selling out-of-the-money calls, those higher-impact bullish bets that BTC would need a big rally to pay off. It helped them pocket the premium received up front as an easy return, especially during periods of low price activity.
This avalanche of covered call selling by institutions has created a steady supply of options, which has reduced implied volatility.
“Over 12.5% of all mined Bitcoin is now in ETFs + Treasuries. Since these holdings do not generate native returns, [call] “Overwriting emerged as the dominant flow throughout 2025, driving continued pressure on IV from the supply side,” Jake Ostrovskis, head of Wintermute’s OTC department, said in a note to CoinDesk.
Covered lengths
Institutional adoption has greatly reshaped bitcoin options trading, bringing BTC closer to how traditional markets behave.
For most of 2025, BTC puts, bearish bets to cover downsides, traded at a persistent premium to calls with short- and long-term maturities. This selling bias has flipped the script on previous years, when longer-dated options consistently featured a bullish buying bias.
The change does not necessarily indicate bearish vibes, but reflects an influx of sophisticated players who prefer to hedge their bullish bets.
“The upward pressure and covering demand, which is typical of institutional investors, saw a steady movement from a buying bias to a selling bias, which propagated across the entire term structure. A sign that real money is long and hedged. Not necessarily bearish,” Lakha added.
