According to a 10x Research report, the Bitcoin options market flashed warning signs long before the recent price correction. Data shows a steepening of the short-term options volatility curve, indicating rising investor demand for hedging near-term risk, while long-term expectations remain relatively stable. Since the October liquidation event, options skewness has shifted significantly toward bearishness, reflecting increased demand for put options and risk-averse activity.

The report notes that Bitcoin's implied volatility remains higher than realized volatility, favoring sell-side strategies; while Ethereum's implied volatility has fallen below realized volatility, increasing opportunities for buyers. Trading flows indicate that Bitcoin investors are selling call options for profit, while Ethereum traders are defensively buying put options. 10x Research believes that shorting short-term Bitcoin option volatility and building long-term Ethereum exposure can be a way to capture time value decay and volatility reversion opportunities.