Bitcoin derivatives markets saw a quiet and meaningful rearrangement in July. This was marked with two liquidation-driven drawdowns at Futures and a record-breaking event where more than $15 billion was opened in options.
These changes came along with relatively calm price action as Bitcoin floated between $101,000 and $110,000 during June before stabilizing nearly $107,000 at the start of July.
While the reduction in Futures and Options may suggest that investors will diminish interest, a closer look at the data shows a turn towards new quarter positioning rather than a completely weakened belief in strategic risk and rotation.
Open interest on Bitcoin futures began at nearly $72.5 billion in June and peaked at $77.7 billion on June 10th. The climb shows a short-lived increase in speculative exposure as traders positioned further after the May rally.
However, optimism quickly faded, and the market experienced a sharp minus side wick on June 15th. Futures oi’s total plummeted to $69.6 billion (down 10% over five days), while spot prices fell by about 4%. This marked the first major deletion of the month, revealing an overly extended long position vulnerability.
A similar pattern continued on June 23rd as geopolitical tensions in the Middle East encouraged risk-off flow. Bitcoin temporarily fell below $102,000, this time falling again from $72.9 billion to $68.3 billion. The response wasn’t as sharp as mid-month, but it showed how sensitive leveraged traders are to macro events. Binance’s open profit share remains stable between $11.3 billion and $12.3 billion, meaning the biggest swing comes from offshore venues and CMEs.
Even if the price was recovered to $107,000 by the end of the month, the OI would not return to its early June high. By July 2nd, total futures were $69.5 billion, down about 10% from its June peak. Despite price stability, this decline in leverage indicates that there is a structurally “clean” market with little trends in forced liquidation cascades.
In contrast to the zigzag futures landscape, Bitcoin options rose steadily throughout most of June 1, rising from $38.2 billion on June 1 to a record $51.1 billion by June 27th.
On June 28th, almost 40% of all unresolved options agreements expired. Deribit alone, 141,000 BTC unveiled the book with concept exposure. Bitcoin options fell 31%, down from $51.1 billion to $35.2 billion per day. However, despite the expiration date, Bitcoin prices have hardly moved, stabilizing around $107,300. This separation between this concept and price reinforces the idea that this is not an event of direction, but a mechanical adjustment.
This has been one of the cleanest quarter expirations for a while. The low volatility surrounding the event suggests that most positioning has already been pre-adjusted, and dealers need to proactively obtain expiration dates. The post-expiry option had rebounded to just $35.2 billion by July 2nd, indicating that traders were in the early stages of their third quarter relocation.
The June futures and options cleanup had a visible impact on the market structure. Despite the low volatility realized, implicit volatility remained relatively restrained. This trend, combined with a flattened CME futures base that fell from about 9.5% per year on June 10 to about 6% on June 30, reflects a low risk profile in the derivatives market heading into the third quarter.
Much of this re-rick appears to be driven by institutional flows. CME saw a massive futures roll throughout the final week of June, with traders moving from BTCM25 (expired June) to BTCU25 (expired September). Meanwhile, at Delibit, call heavy positioning until late June was replaced by a more balanced skew, with strikes rising from around $110,000 to $120,000 in July and September.
This rewind and expiration result is a market that is suitable for directional movements. Bitcoin entered the country in July and has a spot price that remains almost the same since mid-June, with far fewer derivatives. Futures OI has fallen over $8 billion from its high, but options are $16 billion below its June peak.
The lack of impact on prices during these declines, particularly the expiration date of the large options on June 28, suggests that traders continue to be involved but are more disciplined. Looking at other major catalysts in the third quarter, a lighter, more responsive market opens the door for a sharper movement. Whether that leads to breakouts above ATH or returning to volatility compression depends on the external trigger. However, after a volatile June in June, the deck was cleared for the next leg of the derivative cycle.
The quarter’s post-end wiped out billions of dollars from Bitcoin’s open interest.