Crypto sentiment steadies as BAT soars, leverage muted

Bybit has reported early signs of recovery in crypto market sentiment after a sharp selloff at the start of December.

The crypto exchange released a new derivatives-focused market analysis with analytics firm Block Scholes. The report tracks derivatives pricing, leverage conditions, and altcoin performance.

The study focuses on the period after a steep decline on 1 December. Market participants linked that move to hawkish signals from the Bank of Japan.

Bybit said traders remain cautious despite recent positive news. Major cryptocurrencies still trade well below their record levels.

“Cryptocurrencies have been buffeted by multiple crosswinds, from shifting expectations surrounding major central bank policies to mounting concerns over the viability of DATs,” said Han Tan, Chief Market Analyst, Bybit Learn.

“Major crypto prices are likely to remain beholden to macro forces over the immediate term, especially with the pivotal Fed rate decision looming, even as the crypto world attempts to shake off the ghosts of the Oct 10 liquidation event,” said Tan.

Bitcoin has climbed back to a two-week high above $93,000. This move followed the early-December decline linked to central bank signals from Japan.

Ether has moved back above the key psychological level of $3,000. Traders often watch this round-number level as a gauge of sentiment in the second-largest cryptocurrency.

The report notes that recent market gains followed several positive catalysts. Vanguard has opened its platform for trading crypto exchange traded funds and mutual funds.

Data from the options market suggests a reduction in downside fear. Traders are paying much smaller premiums for crash protection than at the start of the month.

The report highlights a sharp move in put-call skew. Skew measures the extra cost of bearish put options relative to bullish call options.

Put-call skew premiums have fallen from around 10-13 percentage points at the start of December. The current level is about 2-4 percentage points.

This change suggests options traders have scaled back hedges against large price drops. Derivatives prices point to a less stressed market environment than one week earlier.

Bybit and Block Scholes also tracked activity in perpetual futures. These instruments offer leveraged exposure to crypto prices.

Open interest in perpetual futures has risen modestly during the recent rebound. Traders have increased positions but at a slower pace than during earlier rallies.

Open interest remains well below levels seen before 10 October. That date marked a major liquidation event in leveraged markets.

Recent selloffs have not produced the type of cascade of forced liquidations that often appears when leverage is elevated. The report links this pattern with lower participation in leveraged trades.

Block Scholes applied its Risk Appetite Index to current market conditions. The index tracks euphoria when readings rise above 1. It tracks panic when readings fall below -1.

The company said momentum in the index has a strong relationship with spot price returns over time. The current readings point to improving sentiment but not outright optimism.

According to the analysis, traders have become less bearish. They have not yet shifted into a clearly bullish stance.

The report links this caution with the gap between current prices and previous all-time highs. Both bitcoin and ether remain far below their peak levels from earlier cycles.

The study also highlights the performance of Basic Attention Token. BAT has gained more than 100% since 11 October.

The token trades around $0.27. This price move has outpaced the broader recovery among altcoins.

BAT runs on the Ethereum network. It is part of the Brave browser ecosystem.

Brave focuses on privacy and an alternative advertising model. The browser reports more than 100 million monthly users.

BAT is used within that advertising system. The report places BAT in the “social tokens” category.

Social tokens rank as the second-best performing crypto sector over the past month. Only privacy-focused coins have delivered stronger gains in that period.

Bybit and Block Scholes plan further updates on derivatives flows and sentiment. They expect central bank decisions and regulatory developments to remain key drivers of crypto prices over the coming weeks.