Core Insights - Bitcoin derivatives activity is expected to take two quarters to recover from the significant loss of $19 billion in open interest due to the flash crash on October 10 [1] - The medium-term outlook for Bitcoin derivatives remains constructive, with potential recovery to pre-shock levels by Q1 or Q2 2026 if macro conditions improve [2] - Current Bitcoin open interest in futures, options, and perpetual contracts is approximately $140 billion, down from $220 billion before the crash [3] Market Activity - Derivatives volumes peaked at $748 billion on the day of the crash but have stabilized around $300 billion for the past week [3] - There are significant clusters of bullish call contracts at the $140,000 and $200,000 strike prices, totaling $1.1 billion and $887 million respectively, with a notable $1.1 billion cluster at the $85,000 price indicating bearish sentiment [4] - The reduction in open interest suggests a quieter year-end expiry, which may help stabilize the market compared to previous high-leverage periods [5] Future Outlook - The market is expected to experience lighter positioning and reduced mechanical pressure heading into the year-end expiry, contributing to a healthier derivatives market setup for 2026 [5] - Activity is likely to cluster around key strike levels, with potential for short-term dislocations due to renewed volatility or ETF-related flows [5]