Morpho (MORPHO) is an efficient Ethereum-based protocol revolutionizing decentralized lending with customizable peer-to-peer and pool-based solutions.

Liquidity pools have revolutionized decentralized lending and borrowing by offering a wide choice of product options and significant liquidity levels. For several years, protocols like 

 (COMP) have been lauded as true innovators that introduced a real game-changer: pool-based lending and borrowing. However, a closer look reveals that things aren’t as efficient and smooth as they may seem within the world of crypto lending. The problem is that lending pools on decentralized protocols often have mismatches between lenders and borrowers, with the former substantially outnumbering the latter. As a result, lenders earn only meager 

s, while borrowers pay exorbitant fees to access funds via these pools. Another critical problem is the lack of customizability in lending and borrowing products, with many protocols adopting a one-size-fits-all approach.

Morpho (MORPHO) is a decentralized protocol on 

 (ETH) that aims to improve the efficiency and flexibility of crypto lending and borrowing by offering a unique model that combines the elements of 

 (P2P) and pool-based matching of lenders and borrowers. To be precise, one of Morpho's essential products, Morpho Optimizers, specifically focuses on P2P matching, with pool-based lending and borrowing used as a fallback option. Morpho also offers users an excellent level of customization for creating new lending markets through its core protocol.

With its innovative lender-borrower matching mechanism and highly customizable and flexible markets, Morpho greatly improves capital allocation and transaction efficiency in the 

 (MORPHO) is an Ethereum-based decentralized lending protocol that offers a unique P2P order matching mechanism to improve the efficiency and affordability of 

 The platform also enables users to create efficient lending markets with highly customizable lending and borrowing parameters. Additionally, it offers a product, Morpho Vaults, for curated lending at varying risk levels.

, a France-based software development company founded in 2021 by Merlin Egalité and Paul Frambot. It's also supported by the nonprofit 

As its first major product, the project launched Morpho Optimizers on the Ethereum blockchain in 2022. Morpho Optimizers is designed as an add-on solution for lending pools on Aave and Compound to help match individual lenders and borrowers. The transacting parties can benefit from a more efficient lending process than with the default pool-based mode.

In January 2024, the project launched Morpho Blue, later rebranded to Morpho, a solution to help users create highly flexible lending markets with custom parameters and options. Morpho acts as the backbone of the Morpho ecosystem, and the project team has turned its focus to promoting and further developing this product. At the same time, Morpho Optimizers remains an integral part of the platform's core offering, albeit in a less prioritized state than Morpho.

The Morpho protocol consists of three main products — Morpho, Morpho Vaults (based on the underlying protocol) and the legacy Morpho Optimizers. Morpho allows users to create individual lending markets by specifying their preferred options for the following key attributes:

All these parameters are highly customizable, with minimal interference from the Morpho governance mechanism. Some parameters do have to conform to certain requirements; e.g., the IRM and LLTV must be from the list approved by the protocol's governance.

Morpho's high level of customizability is a significant departure from the typical model used on decentralized lending and borrowing platforms. On most other protocols, there are fixed parameters governing the lending and borrowing process; e.g., only certain collateral assets, lending assets or LLTV rates are allowed. In contrast, Morpho lets you customize all of these options, giving lending market creators an unmatched degree of freedom. The protocol offers the following key benefits to users, developers and market operators:

While Morpho is currently the platform's flagship product, the legacy Morpho Optimizers continues as a key offering in the platform's product line. Morpho Optimizers are add-on layers to the Aave and Compound lending pools. They can be used to facilitate a peer-to-peer match between lenders and borrowers. Since typical lending pools — including on platforms like Aave and Compound — are often heavily skewed with more lenders than borrowers, both parties end up paying excessive fees. Borrowers have to confront high costs due to the need to service the many lenders in the pool. In turn, lenders fight for the meager scraps left over from insufficient numbers of borrowers.

By using a P2P matching mechanism, Morpho Optimizers effectively takes the lender and borrower away from pool-based interaction and establishes a direct relationship between them. This allows users to borrow assets at cheaper rates, while also delivering better APYs for lenders. If either party withdraws from the direct lending relationship, both parties have the option to use the standard lending pools on Aave and Compound as a fallback.

The platform's third core product, Morpho Vaults (covered in more detail below) utilizes the underlying protocol and provides a way to lend through carefully curated market options at different risk profiles. This can suit lenders who are less proficient in using fully customized markets, but still prefer to take advantage of the lending opportunities offered by Morpho.

In order to create a custom lending market on Morpho, you need to have some technical proficiency and, preferably, knowledge of Solidity, the programming language that the protocol uses for its smart contracts. As noted earlier, developers can create a custom market by supplying five base parameters — a collateral asset, an asset offered for lending, an oracle, a preferred IRM and an LLTV. The first four of these normally require an Ethereum smart contract address to be specified. For the collateral and lending assets, these are the addresses for the tokens' contracts. The selected oracle is also usually established via a pointer to its smart contract address, although oracle-less hard-coded prices for the collateral and lent assets are acceptable. Morpho also maintains Ethereum addresses for each IRM whitelisted by the protocol's governance; developers can use these when choosing a preferred IRM.

The last value, LLTV, is a hard-coded figure that defines the threshold beyond which a loan becomes unhealthy due to its poor 

. Liquidators on Morpho are protocol actors who are incentivized to cover bad debts in return for collateral, similar to the method used on many other lending platforms. They’re allowed to liquidate up to 100% of the debt. In return, liquidators receive the debt's collateral, as well as an additional incentive for their work.

Since Morpho is an oracle-agnostic protocol without a built-in oracle, each market can have its own oracle that sources prices for the collateral and lending assets from external sources. Developers are completely free in that regard, and can even hard-code asset prices for the market if they don't wish to use a price oracle at all. Naturally, an oracle is preferred for maintaining the most up-to-date and dynamic pricing information.

The IRM used is the only base parameter with which developers are somewhat restricted in their choice, as only whitelisted IRMs are allowed for a market. As of mid-November 2024, there’s just one whitelisted IRM that market creators can specify — the 

. This model dynamically adjusts interest rates to maintain the proportion of borrowed funds to supplied funds at close to 90%.

Morpho Vaults are a tokenized vault product that offers curated lending opportunities with varying pre-programmed risk parameters. Each vault is associated with a single loan asset, and can allocate deposits across multiple Morpho markets, thereby leveraging the overall liquidity available on the Morpho protocol. Morpho Vaults suit lenders who prefer predictable risk management over the uncertainty of completely custom markets. Each lender can earn APY rates commensurate with their chosen 

There is no limit on the number of vaults you can open on Morpho. Thus, you might even allocate funds to different vaults with significantly different risk levels to diversify your exposure.

Morpho Vaults' curated nature eliminates the need for users to spend time researching and evaluating individual markets' risk levels and return opportunities, as risk exposure is actively managed by the vault.

Since the vaults are connected to the underlying protocol, and source liquidity from it, they’re dynamically rebalanced, which helps optimize yields. Thanks to their permissionless and immutable nature, the vaults are also completely transparent. Moreover, they’re noncustodial, granting users full control over their deposited assets, which can be withdrawn at any time.

A lender deposits an asset into a Morpho Vault and receives shares of the vault as confirmation of their investment. The vaults themselves are tokenized products utilizing Ethereum's 

 standard, designed to represent tokenized vaults for yield-bearing assets. Each vault may be owned by a 

 (DAO), an individual DeFi expert or some algorithm maintained by a DeFi platform. A vault can be owned by only one entity. The owner may specify additional roles/entities for managing the vault. These roles can include one curator, one guardian and multiple allocators.

The curator is a party who sets certain limits, rules and boundaries for the vault, such as specifying asset supply limitations and enabling/disabling specific markets. Curators are instrumental in maintaining appropriate risk levels for their vaults. Assets that lenders lock in a vault are supplied to the protocol's underlying markets, based on curators' whitelists. There can only be one curator for each vault.

The role of guardian is a key vault position. A guardian protects the integrity and security of the vault. Guardians can revoke any action by the vault owner (or other entities) if they consider it to be against the interests of vault lenders. Each vault can only have one guardian, typically a DAO consisting of vault depositors.

Allocators are protocol actors whose job is to rebalance the liquidity utilized by Morpho Vaults to optimize interest rates and accessible liquidity. An allocator’s job is to rebalance and optimize the total liquidity, either manually or using bots, to best meet the needs of Morpho borrowers.

Morpho Vaults' operations aren't regulated by the protocol's governance mechanism. Each vault owner is responsible for their vault's governance model. Specific roles, such as the curator and the guardian, are designed to help in establishing transparent and secure governance procedures for a vault.

What Is the Morpho Crypto Token (MORPHO)?

The platform's native cryptocurrency, MORPHO, is envisioned as a 

. Holders of MORPHO have the right to participate in decision-making on the platform's future direction, general rules, deployment of smart contracts and allocation of funds from the treasury. Although Morpho promotes lending and borrowing markets that operate with minimal interference from the protocol's governance community, there are some general guidelines and rules through which the community needs to establish certain standards, minimum requirements or whitelists. MORPHO token holders are instrumental in this process.

The original MORHPO token was launched on Ethereum in June 2022 with a supply cap of 1 billion. However, there were limitations to the original token contract that negatively affected its functionality. Specifically, the token wasn't designed to facilitate efficient on-chain voting. As a result of these limitations, the project decided to relaunch the token, now on an upgraded contract. The new reincarnation of MORPHO will offer better functional capabilities, including more efficient on-chain governance processes. 

As of the time of writing on Nov 17, 2024, the project team has yet to deploy the new token. The new MORPHO will also be a supply-capped crypto, with a maximum and total supply of 1 billion. The token's supply distribution shares are shown in the chart below.

 token before its market launch. Bybit Pre-Market Trading is an over-the-counter (OTC) trading platform that provides access to promising new cryptocurrencies before their listings on the Spot market. The key advantage of the platform is the ability to access cryptocurrencies at desirable rates before the broader crypto market affects their prices.

Bybit's carefully designed curation process ensures that only crypto assets with solid potential and fundamentals are whitelisted for Pre-Market Trading. This saves you the time required to investigate each cryptocurrency, and reduces the risk of investing in scam projects. Naturally, you’re also encouraged to 

 on crypto assets you might consider purchasing through Bybit Pre-Market Trading.

Morpho represents a unique and potentially highly effective approach to DeFi lending and borrowing. The platform's facilitation of isolated and highly customizable lending markets gives DeFi users unmatched freedom in terms of choice and variety. In addition, users who prefer the stability of curated and well-defined risk profiles can take advantage of Morpho Vaults for more predictable yields. The use of the overall underlying protocol liquidity along with entities such as allocators makes Morpho Vaults particularly effective at optimizing lending and borrowing costs.

While custom lending markets launched via the protocol are now Morpho's key focus, the legacy Morpho Optimizers also continue to offer value. P2P matching of lenders and borrowers as an add-on to the standard pool-based mechanism is a functionality many DeFi users will find helpful. Morpho Optimizers can offer lenders and borrowers active on Aave and Compound an alternative and highly effective way of conducting their operations.

With this arsenal of innovative and unique products, the Morpho protocol is quickly shaping up as a leading platform in the lending niche of the DeFi industry.

Advanced

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Morpho (MORPHO): Leading Efficient, Permissionless Crypto Lending

Puff is a meme coin with a dragon-based theme. It uses a gamified mechanic for distribution and is based on the Ethereum blockchain. Learn more here.

 are designed solely for entertainment, so they can have a lot of unusual and creative features. One example of the interesting applications of meme coins is Puff. This fun coin aims to attract users by adding elements of story and gamification to its design. If you're interested in learning about Puff and seeing why it's so popular lately, check out this guide.

 is a meme coin with a dragon-based theme. It uses a gamified mechanic for distribution and is based on the 

 blockchain. It encourages users to engage in its ecosystem by following along with Puff the Dragon's storyline.

mETHLab is an Ethereum-based lending and borrowing protocol. It's fixed-term and fixed-rate, with no forced 

 of collateral. Users can supply PUFF or mETH tokens and borrow mETH or USDe against these tokens.

 for the mETH Protocol. Users who hold mETH or participate in certain parts of the Puff the Dragon ecosystem can acquire points that will be converted to COOK. People can also acquire COOK by burning PUFF.

Puff aims to attract users with a novel approach to meme coins and lending. Its ecosystem takes the trending 

 ideas of gamification and storytelling and applies them to its products. For example, instead of simply borrowing on the mETHLab protocol, users are encouraged to "cook with Puff the Dragon in the mETHLab." The creators hope this adds a little extra fun and enjoyment that makes people more interested in working with their system.

As the dragon's origin story explains, Puff is also attempting to combine two opposing viewpoints into its ecosystem. Puff the Dragon is a "black and gold dragon" that is part chaos and part lawful order. Similarly, Puff's ecosystem tries to combine the regulation of 

. Unlike other ecosystems that either “play it safe” or focus on experimentation, Puff hopes to combine the two concepts into one system.

 network. All of its features are run through Ethereum’s system, so the project is reliable and secure. However, its secondary layer operates parallel to the main network, so it’s more scalable and features lower fees than Ethereum’s. The full ecosystem is accessible through the project's online website. This helpful interface guides people through staking, borrowing and lending Puff's digital assets in a fun, gamified manner. Unlike with traditional exchanges, the videos, cartoon assets and entertaining visuals are used to create a gamelike, fantasy feel.

The Puff the Dragon project offers far more than just a single, tradeable meme coin. Once you get involved in its ecosystem, you can access all of these exciting features.

The Puff Penthouse is where fans of Puff the Dragon can interact with the whole ecosystem. Users can stake and burn PUFF tokens, or send tokens to the mETHLab through this interface. It features many adorable and intriguing pieces of 3D art that add to the Puff lore.

 within the Puff the Dragon ecosystem. Each NFT features an individualized rendition of the project's dragon. There are currently 8,888 NFTs, ranked according to rarity. The rarest level, Legendary Puff Dragons, has 388 different variations.

Mystic Potions are another set of NFTs within the ecosystem. They come in red, green, blue and other colors, and can be used to mint Puff NFTs. There are 8,888 Mystic Potions, each one a 

. Only original ecosystem users are able to receive a Mystic Potion, but if desired, they can convert it to a Puff NFT and sell it.

PUFF is the main token of the Puff the Dragon ecosystem. In addition to trading like a standard meme coin, it can also be used for staking and lending. PUFF has a total supply of 888.888888 million tokens, 

 are indefinitely locked. Tokens will be distributed as follows:

The PUFF token has undergone plenty of price fluctuation since it was released. Shortly after its launch in April 2024, the coin shot up to an 

. However, as user interest waned, its price dropped to an ATL of $0.03 in September 2024. Nevertheless, there’s still a lot of interest in trading the token. Its price is back up to $0.0947 as of Nov 18, 2024, and many traders are bullish.

Analysis of market conditions from DigitalCoinPrice suggests a slightly different story: a small price decrease of around 2% to 5% in the upcoming weeks before rising in value as 2025 approaches. According to DigitalCoinPrice, by 2025 Puff 

, and by 2030 the token may be worth up to $0.54.

Looking to trade Puff tokens? Bybit now offers the PUFF/USDT Spot trading pair. To get started, you’ll first need to create a Bybit account, then fund it with cryptocurrency and navigate to the 

PUFF is an exciting project that's gotten a lot of interest recently. Thanks to its charming story and blend of helpful features, PUFF has done a great job of maintaining user engagement. The coin's trading volume is also fairly stable. This is a token worth investing in if you enjoy seeking out underrated yet promising meme coins.

 toward Puff the Dragon's design. Some feel that the coin's tokenomics and general structure keep it from being a true meme coin. Instead, they suggest that the coin is operating more like a web3 yield-farming system, but is using the meme coin label to get away with lax regulation and an imprecise road map. This doesn't necessarily mean the coin is doomed to failure, but it does mean you might want to look at it more critically than you might regard other meme coins. Since volatility is inevitable, it's essential to use 

 strategies such as portfolio divestment before buying PUFF.

Puff (PUFF) is an intriguing model of a meme coin that uses features besides memes to attract users. By creating a gamified staking and lending mechanism, Puff hopes to capture users' attention and get them invested in its dragon-themed storyline. Though this project still needs to prove that it can attract more fans, it's on the way to generating significant levels of interest. 

Intermediate

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Puff (PUFF): Entering the Magical Realm of Puff the Dragon

As Bitcoin's dominance persists, emerging regulatory clarity may catalyze a resurgence in altcoins, particularly for platforms like Ethereum and Solana, which are poised to benefit from a pro-crypto environment.

: Donald Trump’s election signals a pivotal shift in cryptocurrency policy, moving from skepticism to advocacy, which may redefine the regulatory landscape.

: The election result triggered immediate and substantial reactions in the crypto markets, particularly evident in Bitcoin's price surge, reflecting heightened investor optimism.

: A Republican-controlled U.S. Congress could lead to clearer and more favorable regulations for digital assets, fostering innovation and investment in the sector.

: As Bitcoin's dominance persists, emerging regulatory clarity may catalyze a resurgence in altcoins, particularly for platforms like Ethereum and Solana, which are poised to benefit from a pro-crypto environment.

Donald Trump’s re-emergence as the “crypto president” represents a dramatic turnaround in his relationship with the cryptocurrency sector. Once a vocal critic, his 2024 campaign embraced Bitcoin, positioning it as central to his economic strategy. This transformation can be attributed to the substantial financial contributions from crypto firms, which played a crucial role in his campaign, underscoring the industry's growing political influence. By vowing to make America the “crypto capital of the planet,” Trump not only appeals to a burgeoning voter base invested in digital assets, but also aligns himself with the interests of powerful crypto stakeholders. This shift could fundamentally alter the regulatory framework governing cryptocurrencies, potentially easing restrictions and fostering an environment more conducive to innovation.

The immediate aftermath of Trump’s victory was characterized by significant volatility in the crypto markets, particularly with Bitcoin (BTC) experiencing a sharp rally from approximately $70K to nearly $90K. This movement was not merely speculative; it reflected a broader alignment of market sentiment with political outcomes. The use of on-chain prediction markets such as Polymarket illustrated how traders adjusted their positions in real time based on election developments. As Trump's victory appeared more likely, BTC’s correlation with these prediction markets intensified, showcasing a direct link between political events and crypto valuations. This responsiveness highlights the increasing intertwining of traditional financial markets with crypto as investors seek to leverage political insights to inform their trading strategies.

Regulatory Outlook and Congressional Influence

With a Republican majority in both chambers of the U.S. Congress, the potential for significant regulatory reforms in the cryptocurrency space is heightened. Historical context reveals that previous efforts, such as the FIT21 Act, aimed to delineate the regulatory authority over digital assets, although it faced challenges in legislative passage. However, the current political landscape, coupled with substantial financial backing from crypto-friendly Super PACs, sets the stage for a more favorable regulatory environment. The election cycle demonstrated the effectiveness of targeted political spending in reshaping legislative priorities, particularly in key Senate races. 

As newly elected officials take office, their pro-crypto stances could lead to expedited discussions and potential passage of critical regulatory frameworks, thereby reducing ambiguity and fostering a more robust investment climate.

While Bitcoin continues to dominate the market narrative, the potential for altcoins to gain traction is significant, especially in light of a supportive regulatory environment. Historical patterns suggest that Bitcoin's dominance often peaks during bull markets, followed by a capital rotation into altcoins as investors seek higher returns. The recent surge in Bitcoin's price has overshadowed altcoins, and yet the incoming administration's pro-crypto posture may catalyze renewed interest in platforms like Ethereum and Solana. These networks, which facilitate smart contracts and decentralized finance (DeFi) applications, stand to benefit from increased investment as regulatory clarity emerges. The influx of capital into altcoin markets could be accelerated by the anticipated legislative focus on fostering innovation within the cryptocurrency sector, marking a potential shift in market dynamics as investors diversify their portfolios beyond Bitcoin.

In conclusion, Trump's presidency heralds a transformative period for the cryptocurrency landscape, characterized by potential regulatory clarity and increased market participation. As the political and financial realms converge, stakeholders in the crypto ecosystem must remain attuned to the evolving landscape, ready to adapt to new opportunities and challenges that arise in this dynamic environment.

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Bybit x Block Scholes Institution Report: Takeaways From the U.S. Election and What to Look For Next

Nansen has partnered with TRON DAO to integrate the TRON network into Nansen V2, enhancing on-chain analytics for the TRON ecosystem. 

Daily Top Performer — Virtuals Protocol (VIRTUAL)

The S&P 500 climbed 0.4%, driven by a nearly 5% surge in Nvidia shares ahead of its highly anticipated earnings report, which lifted market sentiment despite ongoing geopolitical concerns.  Coindesk Indices, an index measuring broader cryptocurrency market performance was up by 0.15%, with Bitcoin rising by 1.13% and Ether dropping by 1.62%, in the past 24 hours.

Today's top performer is VIRTUAL, which surged 5.2% after the launch of Agentstarter, empowering founders to build successful AI agents with Virtuals Protocol.

Virtuals Protocol (VIRTUAL), founded in 2021, allows users to invest in and co-own AI-driven virtual assets like companions and influencers. Its model fosters community ownership, transforming AI agents into revenue-generating assets across platforms like Roblox and TikTok. The platform attracts contributors from AI and gaming to drive innovation in virtual economies. Virtuals Protocol introduces 

, an AI agent launchpad offering funding, development support, and distribution for creators. It aims to help founders build successful AI agents within a thriving ecosystem and long-term incentive structure.

Check Out the Latest Prices, Charts, and Data of 

 to integrate the TRON network into Nansen V2, enhancing on-chain analytics for the TRON ecosystem. This collaboration aims to provide developers, users, and projects with valuable data to foster growth and innovation. The integration will offer advanced features like Token God Mode, Wallet Profiler, and Smart Alerts, helping optimize decentralized applications (DApps) and improve transparency within the community. TRON’s high-speed, low-cost blockchain infrastructure will benefit from these enhanced analytics to further empower the ecosystem.

Yesterday, total inflows into BTC Spot ETFs amounted to $600.3 million, with $16.2 million coming from GBTC and $584.1 million from non-GBTC sources.

 allows users to earn XP for transactions, quests, gas fees, and referrals in its wallet. XP, while offchain, is tied to wallet addresses and used to level up and unlock exclusive rewards. Key features include free transactions on the ZERϴ Network, daily quests, and retroactive XP for active wallets before mid-October. Rewards enhance the onchain experience but are non-transferable. The program encourages bridging assets to ZERϴ and active participation to maximize XP and rewards.

Beginner

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Nansen Partners with TRON DAO to Enhance On-Chain Analytics for TRON Ecosystem

Bybit 360

Options

Learn how this data can help us make more informed trades, we aim to equip traders with the tools they need to navigate the market effectively. 

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 trading has been an important part of the broader crypto economy and the most important price discovery venue for cryptocurrency, especially for blue chips like 

. Professional traders and institutions have been using futures and options as part of their portfolios to hedge their positions, improve the execution of their strategies and potentially increase the profitability of their portfolios. 

Most participants in the cryptocurrency derivatives markets are professional traders (or as some may call them, 

) who are often at the forefront of crypto trading.. Observing the derivatives markets by constantly examining the relevant data could provide valuable insights into how these professional traders see the market.

In this article, we’ll provide a practical overview of derivatives trading data and explain how an everyday trader can extract actionable information from this data. By discussing how this data can help us make more informed trades, we aim to equip traders with the tools they need to navigate the market effectively. 

Open interest (OI) is one of the most common metrics in crypto derivatives trading. It refers to the number of outstanding unsettled (opened) contracts — whether perpetual, futures or options — that market participants hold at any given time.

Figure 1: BTCUSDT Perpetual open interest on Bybit

OI is essential because it essentially tracks the number of active market participants and, to some extent, is able to reflect the level of willingness of these professional traders to make trades at a specific time. 

 OI on Bybit. There was a clear spike in OI on September 19, 2024, when the United States Federal Reserve delivered its 50 bps rate cut. This surge in OI could mean traders have been more willing to bet on BTC prices after confirmation of the cut.

It’s important for general traders to know how active the market is. If the market is active, it could give asset prices stronger momentum. In contrast, a less active market with a continuing lower OI could mean that traders are in a wait-and-see mode.

The long/short ratio is another derivatives trading indicator from which we can extract important information. It essentially gives you a glimpse of oversold sentiment among professional traders. As the name suggests, the long/short ratio expresses the net long and net short positions as percentages of all position holders within a specific period. 

Figure 2: Bybit’s BTCUSDT Perpetual daily long/short ratio.

Examining the changes in the long/short ratio could also give general traders more confidence to spot trends. For example, in early September 2024, BTC prices saw noticeable fluctuations, from around $64,000 in late August to near $52,000 in early September.

Figure 2 shows the daily long/short ratio of BTCUSDT on Bybit. During the sell-off, the long-short account ratio increased for three consecutive days and reached 2.9 on September 7, 2024, the highest level in a recent month.

Interestingly, as Figure 3 suggests, the price of BTC decreased during the highlighted period while the number of long accounts accumulated. This divergence could imply that derivatives traders have been gearing up for a potential trend reversal, thereby opening more long positions.

Let's look at the recent BTCUSDT perpetual long/short ratio. Figure 4 shows the ratio dropping from 1.71 on Sep 19, 2024 to 1.25 on September 20, one day after the Fed's rate cut. Despite the market seeming to react positively after the cut is delivered, the long/short ratio shows that short accounts have actually increased. 

This increase could be interpreted as traders taking a relatively conservative stance, choosing not to increase their long positions and to hedge with additional short positions as BTC’s price increases. It would be instructive to look at readings for the next few days to reach a clear conclusion. 

Figure 4: Bybit’s BTCUSDT Perpetual daily long/short ratio

It's worth noting that the long/short ratio can also be categorized by trader profile, such as the top 100 largest position holders. It can also be viewed under a different time frame, such as one hour or 30 minutes. Each of these parameters may provide different information. We highly recommend users reference multiple data points from different categories to get a more complete picture. 

. We also recommend the following reading:

Options have been one of the most favorite trading products for professionals, especially institutional traders. The flexibility and composability of options enable traders to use complex position setups and strategies. Looking into options trading data may give us a peek at how these professional participants have been setting up their trades.

Understanding OI by Expiration & Strike Price

 in options refers to the number of opened contracts within a specific time frame. Options contracts also have many more parameters than perpetual contracts, and open interest alone can be filtered by types of options, expiration dates, strike prices and much more. Let's take a look at the below examples.

Figure 5a: BTC call options OI by expiration.

Figure 5b: BTC put options OI by expiration.

Figures 5a and 5b (above) show the OI of BTC call and put options by expiration dates. In September 2024, most of the OI, both call and put, was on the contract with a Sep 27, 2024 expiration. Traders seem to have been betting on where BTC will go by the end of the month.

Now, let's look at the strike prices among the OI with the Sep 27, 2024 expiration date. Figure 6a suggests that most of the OI for BTC calls was at $60,000, while Figure 6b indicates that the $40,000 put has the most OI. 

This gives us a price range as a reference, which could mean that options traders who are betting on BTC prices to rise by the end of the month seem to believe that by the expiration date (September 27), BTC will have a chance to hit $60,000 or above. 

In addition, traders have been using relatively 

 (OTM) and less expensive put options to protect their long positions. This could explain why $40,000 has most of the OI.

Figure 6a: BTC call options OI by strike price.

Figure 6b: BTC put options OI by strike price

So, how can this information be interpreted? At the time of this writing, BTC was trading at around $62,000. A $60,000 call option is in-the-money; if someone has a stronger bias toward a positive price action in the short or medium term, they would certainly buy in BTC calls with high strike prices. If there's a noticeable shift of the OI toward high strike prices' call options, that could mean that the positive sentiment of the post-rate cut could still be somewhat sustaining. Otherwise, it could be interpreted as a conservative setup.

To sum up, based on the above-mentioned data, BTC derivatives traders seem to have remained somewhat bullish after the Fed’s rate cut. However, it seems that most participants were cautiously optimistic, without over-leveraging, and perhaps wanted to see more confirmation of a trend reversal before making additional trades.

 page offers comprehensive information on perpetual, futures and options trading data. During 

, the Bybit Learn team will produce articles and analyses based on the contract data to provide additional insight so that users can make more informed trades.

In some ways, exploring derivatives data is similar to walking in the dark: perhaps you’ll be able to see the road just in front of you, but you certainly won't see too far. It’s also like a puzzle in that each piece of data can give you a little information, but you certainly can't see the complete picture with just one piece. Besides, there are many ways to interpret this data, and everyone may have a different interpretation. We encourage users to study derivatives trading in general, and to become familiar with this data.

While learning about derivatives trading (and using data) can be a powerful approach, it also has limitations, and is usually more applicable to blue chip cryptocurrencies.

Learn From Smart Money: Observing Market Sentiment From Derivatives Data

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