A recent flash crash on October 10 has caused significant turmoil in the Bitcoin derivatives market, resulting in a staggering $19 billion loss in open interest. This incident has pushed Bitcoin’s open interest in various derivatives—including futures, options, and perpetual contracts—to approximately $140 billion, a significant decline from the pre-crash figure of $220 billion.
On the day of the crash, trading volumes soared to an unprecedented $748 billion, although this level has since normalized to around $300 billion over the past week, according to data from CoinGlass. The aftermath of the crash has raised concerns about the potential for a prolonged recovery period, with Bybit’s derivatives operations director, Max Xu, predicting it could take up to two quarters for activity to bounce back. Xu described the correction as one of the largest in Bitcoin derivatives history, stating that while immediate recovery may not be swift, the medium-term outlook remains positive. He suggested that improved macroeconomic conditions, such as expectations for interest rate cuts and enhanced market sentiment, could lead to a gradual return to pre-crash open interest levels by the first or second quarter of 2026.
As it stands, Bitcoin’s price is at $100,800, reflecting a 0.8% decrease over the last day and marking a 10.5% decline compared to the previous month, as reported by CoinGecko.
Analyzing the options market, data from Deribit—the largest crypto derivatives exchange—reveals a notable distribution of bullish and bearish sentiment. There exists a $1.1 billion cluster of bullish call contracts at the $140,000 strike price, along with an additional $887 million of calls at the $200,000 strike price, both set to expire on December 26. However, bearish sentiment is also evident, as indicated by a $1.1 billion cluster at the $85,000 strike price.
Xu noted that the overall decrease in open interest suggests the upcoming monthly expiry in December may be less eventful than usual. “With lighter positioning and reduced mechanical pressure, this should contribute to greater market stability in comparison to previous high-leverage episodes,” he explained. Nevertheless, he acknowledged that activity may still oscillate around key strike levels, and any resurgence in volatility or movements related to exchange-traded funds (ETFs) could lead to short-term disruptions.
Looking ahead, the derivatives market appears to be in a more favorable position as it approaches the new year, potentially setting the stage for more stable trading conditions.
