Bitcoin Derivatives Might Not Fully Recover From October Crash Until Q2
Bitcoin derivatives markets experienced a significant flash crash on October 10, wiping out $19 billion in open interest, with recovery expected to take two quarters, according to Bybit’s Max Xu. Open interest, which fell from $220 billion to $140 billion after the crash, could return to pre-crash levels by Q1 or Q2 2026 if macroeconomic conditions, such as rate cuts, improve. Despite the decline, derivatives volumes have stabilized at around $300 billion. Data from Deribit indicates clusters of bullish and bearish options contracts at various strike prices, with lighter positioning expected for year-end expiries. However, short-term volatility could be influenced by ETF flows or market conditions. Overall, the setup heading into 2026 is deemed healthier for Bitcoin derivatives.
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Bitcoin Derivatives Recovery Outlook
It could take two quarters for Bitcoin derivatives activity to recover from the Oct. 10 flash crash that wiped out $19 billion in open interest, Max Xu, Bybit’s derivatives operations director, told Decrypt. “While I don’t expect a rapid rebound, the medium-term outlook remains constructive,” he said of the correction, which ranks among the largest ever for Bitcoin derivatives.
Xu mentioned that, “If macro conditions turn more favorable— for example, rate-cut expectations materialize and market sentiment improves—open interest could gradually return to pre-shock levels by Q1 or Q2 2026.”
Bitcoin's Current Market Position
At the time of writing, Bitcoin was trading at $100,800, having dropped 0.8% in the past day. The world’s first and largest cryptocurrency by market capitalization is currently 10.5% lower than it was a month ago, according to crypto price aggregator CoinGecko.
Current Bitcoin Derivatives Data
Bitcoin open interest across futures, options, and perpetual contracts now sits at approximately $140 billion, down from $220 billion before the Oct. 10 crash. Derivatives volumes spiked to $748 billion on the day of the wipeout but have since stabilized at around $300 billion over the past week, according to CoinGlass.
Major Positions in Bitcoin Options Contracts
According to data from Deribit, the world’s largest crypto derivatives exchange:
- There's a $1.1 billion cluster of bullish call contracts at the $140,000 strike price.
- Another $887 million cluster exists at the $200,000 strike price for options contracts set to expire on Dec. 26.
However, there are also pessimistic positions, with a $1.1 billion cluster at the $85,000 price. These clusters indicate divided sentiment in the derivatives market.
Year-End Expiry Outlook
Max Xu highlighted that the overall reduction in open interest might make the last monthly expiry of the year relatively quiet. “That means we’re likely heading into a year-end expiry with lighter positioning and reduced mechanical pressure, which should help stabilize the market compared with previous high-leverage periods,” he said.
He noted, however, that activity will likely concentrate around key strike levels, and any renewed volatility or ETF-related flows could lead to short-term dislocations. Xu added that, “Overall, it’s a healthier setup for the derivatives market heading into 2026.”