BTC's volatility has attracted numerous options traders hoping to profit from market's dramatic fluctuations. However, historical data shows that BTC options buyers incur significant losses, a trend consistent with traditional options markets. This result primarily stems from market structural dynamics, especially the relationship between implied volatility (IV) and realized volatility (RV).
High Implied Volatility (IV) and Time Decay Favor Volatility Sellers
At major options exchanges, BTC options are typically priced with high implied volatility. An analysis from 2021 to 2025 indicates thatBTC's 90-day implied volatility averages 5.8 percentage points higher than realized volatility. For instance, when market pricing implies a volatility of 70%, BTC's actual volatility is around 64.2%. In other words, options purchased are priced with a 70% implied volatility, but the actual volatility often ends up being only 64.2%.
To profit from options in the BTC market, traders must capture large-scale market fluctuations that were not anticipated. However, accurately predicting the timing of these events is extremely difficult. If the market does not experience a significant volatility surge or directional breakthrough, most call and put options will approach zero value over time, ultimately causing losses for buyers.
BTC options buyers incur high loss rates because they often pay excessive prices for volatility that is hard to realize.High implied volatility, time decay, and the rarity of extreme volatility events significantly reduce options buyers' chances of success. Although BTC remains one of the most volatile major assets, its options market structure still favors disciplined volatility sellers over speculative buyers.
Miners Prefer Selling Volatility for Cash Realization
Miners tend to sell volatility rather than purchase options because selling options generates cash inflow, while buying options requires premium payments, leading to cash outflow. Since miners' operations heavily depend on capital investment, and BTC price volatility directly impacts their earnings, they are structurally more inclined to monetize BTC's volatility instead of spending money on expensive hedging tools. Unless miners anticipate significant adverse BTC price movements, selling volatility and continuously collecting option fees is more economically sensible than purchasing potentially ineffective protection.
How MicroStrategy, a Large BTC Holder, Generates Revenue
MicroStrategy, one of the world's largest corporate BTC holders, is known for its aggressive BTC accumulation strategy. Despite remaining fully exposed to BTC price volatility, the company actively sells volatility at the corporate finance level by utilizing convertible bonds and stock issuances to monetize stock market volatility.
One of MicroStrategy's primary financing methods is issuing convertible bonds. Convertible bonds are debt instruments allowing bondholders to convert bonds to MicroStrategy stock at a predetermined price. From the company's perspective, issuing convertible bonds is economically similar to selling call options on its stock—which typically trades at twice the value of its BTC holdings. By offering this upside potential to bondholders, MicroStrategy can obtain funding at costs far lower than traditional debt market rates. The embedded option allows bondholders to profit when MicroStrategy's stock price rises significantly, meaning MicroStrategy is selling equity volatility in exchange for upfront capital.
Disclaimer: Markets involve risks, and investments require caution. This article does not constitute investment advice. Digital asset trading may involve extreme risks and instability. Investment decisions should be made after carefully considering personal circumstances and consulting financial professionals. Matrixport is not responsible for any investment decisions based on the information provided herein.
