and that of Solana stand out as leading cryptocurrencies with a key sentiment gauge showing bullish momentum, while their Bitcoin peers and ether get stuck in the dark.
This key sentiment indicator, known as the 25 delta risk reversal, is actually an options strategy involving simultaneously buying a 25 delta call and selling a 25 delta put, or vice versa. “Delta 25” refers to options that are moderately out-of-the-money, meaning their strike prices are far from the current market price and therefore relatively cheap.
This strategy reveals market sentiment by comparing the implied volatilities of these bullish calls and puts, which provide downside protection. A positive risk reversal indicates traders are paying a premium for calls over puts, signaling bullish expectations, while a negative reading reflects a bearish bias. Deribit is the largest crypto options exchange in the world, accounting for over 80% of crypto options activity.
At the time of writing, XRP and SOL risk reversals were positive for all available expirations – October 31, November 28 and December 26 – on Deribit, indicating bias for calls, according to data source Amberdata. A call buyer is implicitly optimistic about the market while a put buyer seeks to protect his portfolio against or profit from an expected drop in price.
This renewed optimism follows an increase in put demand following the October 10 crash which saw the price of XRP fall as low as $1.77 from $2.80 on some exchanges. At the time of writing, XRP changed hands at $2.33, according to CoinDesk data. SOL crashed to $188 from $220 on the same day and has since remained under pressure, as has XRP.
This constructive sentiment stands in stark contrast to Bitcoin’s risk reversal, which shows trades higher than calls across all timeframes through the September 2026 expiration. Clearly, BTC traders remain concerned about downside risks.
In the case of ETH, the bearish trend prevails on December expiration options, followed by bullish pricing for later expiration options.
Risk reversals are widely tracked to gauge market sentiment; However, it should be noted that, while generally reliable, risk reversals linked to XRP and SOL may be less accurate indicators due to the market’s relatively smaller size, volume, and open interest compared to the billions seen in the Bitcoin and Ether options markets.
Aside from the persistent selling bias of Bitcoin options, particularly for quarterly and longer-term expirations, this can be partly attributed to the widespread practice of call crushing, in which traders sell higher-strike call options against their long spot holdings to generate additional yield. In other words, the sell bias reflects yield generation efforts rather than purely bearish market sentiment.
Suspects express neutral sentiment
While XRP options have turned bullish, perpetual futures for XRP present a more balanced market, consistent with the neutral funding rates and sentiment seen in perpetual futures for BTC, SOL, and ETH.
At press time, annualized perpetual funding rates (charged every eight hours) were hovering near zero, indicating neutral sentiment, according to data source Velo. This moderate demand for leveraged bullish exposure to these top cryptocurrencies is typical of traders struggling to regain confidence after a price drop.
The recent stock market crash liquidated leveraged futures bets worth $20 billion, causing massive wealth destruction.
Perpetual futures are derivative contracts that allow traders to speculate on the price of an asset, such as cryptocurrencies, without an expiration date. These contracts use a funding rate mechanism, which is a periodic payment exchanged between traders holding long and short positions to keep the futures price aligned with the spot price of the underlying asset.
When funding rates are positive, it means perpetual futures are trading at a premium to the spot price, signaling increased demand for leveraged bullish exposure. Negative rates suggest otherwise.
