Bitcoin the market became much quieter in 2025 as institutions embraced derivatives tied to the leading cryptocurrency to generate extra cash from their idle coin holdings.
The calm is evident in the consistent decline in BTC’s annualized 30-day implied volatility, as measured by Volmex’s BVIV and Deribit’s DVOL indices. These metrics indicate expectations for price volatility over the next four weeks.
Both indices began the year at around 70% and end the year close to 45%, after hitting a low of 35% in September. This constant downward trend stems from institutions selling call options on top of their spot market holdings to reap returns.
“We [definitely] saw a structural decline in BTC implied vol as more institutional money came in and was happy to reap returns by selling upside calls,” 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 set price within a set time period. Calls let buyers buy the asset at a predetermined price that represents the bullish effort in the market, while puts let them sell.
Selling options is similar to selling lottery tickets – you charge an upfront premium as the seller, which limits your maximum profit if the option expires worthless. Most options expire worthless and favor sellers over time.
Deep-pocketed institutions holding BTC or spot bitcoin ETFs have cashed in on this setup by selling out-of-the-money calls, those bullish bets with higher strikes where BTC would need a big rally to pay off. It helped them cash in the premium received up front as an easy return, especially during periods of dull price action.
This flow of institutional covered call sales has created a steady supply of options, lowering implied volatility.
“More than 12.5% of all Bitcoin mined is now sitting in ETFs + Treasuries. Since these holdings generate no natural return, [call] overwriting emerged as the dominant flow throughout 2025, driving constant supply-side pressure on IV,” Jake Ostrovskis, head of OTC at Wintermute, said in a note to CoinDesk.
Hedge longer
Institutional adoption has reshaped bitcoin options trading in a big way, pulling BTC closer to how traditional markets behave.
For most of 2025, BTC puts, bearish bets for hedging downside, traded at a sustained premium to calls across short- and long-term maturities. This put bias has flipped the script from previous years, when longer-dated options consistently had bullish call bias.
The shift does not necessarily signal bearish vibes, but reflects an influx of sophisticated players who prefer to hedge their bullish bets.
“The pressure on the upside and the demand for hedging typical of institutional investors saw a steady move from call bias to put bias which propagated across the duration structure. A sign that real money is long and hedged. Not necessarily bearish,” added Lakha.
