Research Roundup Newsletter [May 2025]

We present to you our latest issue of Research Roundup, featuring our deep dives into ‘Crypto Options’ and ‘Interest Rate Derivatives and Pendle’.

Welcome to the Crypto.com Monthly Research Roundup Newsletter!

1. Market Index

In May, the price and volume indices grew by +13.32% and 33.14%, respectively, while the volatility index dropped by -16.79%.

2. Charts of the Month

According to Crypto.com Research, the total number of global cryptocurrency owners reached 700 million in April, marking a 163% Compound Annual Growth Rate (CAGR) over the past five years. The total number of global crypto owners was 65 million in May 2020, increasing by nearly 650 million since. The growth indicates a massive shift towards cryptocurrency adoption on a wider scale.

Ethereum’s Pectra upgrade went live on 7 May, with the overhaul placing emphasis on user and validator experiences. For example, EIP-7702 allows externally owned accounts (EOAs) to temporarily upgrade to contract accounts, enabling users to enjoy benefits such as transaction batching and gas fee sponsorship. According to Dune, 72,548 transactions were related to EIP-7702, and a total of 205,362 signed authorisations were created by EOA owners to delegate their account’s execution to a specific smart contract by the end of May.

3. Monthly Feature Articles

Crypto Options

Crypto options are similar to traditional finance options, except the underlying assets are crypto or crypto-related contracts. Compared to the crypto spot and futures, crypto options represent a small but growing market.

The complicated nature of options trading and high liquidity requirements for constructing strategies has limited the growth of the crypto options market. Crypto.com offers intuitive, user-friendly crypto options products like UpDown Options, Strike Options, and Dual Invest to broaden market participation and reduce entry barriers.

Key Takeaways:

• Options can be used for hedging and provide leveraged exposure to price movements. However, they can be complex to understand and may lead to higher investment risks.
• Compared to the crypto spot and futures markets, with $62 billion and $188 billion average daily trading volume in the past 12 months, respectively, the average daily trading volume of crypto options was approximately $3 billion in the same period. The monthly volume of crypto options grew by 47% from May 2024 to May 2025, higher than the growth in spot volume (35%) but lower than that of futures (98%) during the same period.
• Options in crypto centralised exchanges (CEXs) had an average monthly trading volume of $97 billion over the past year, growing by 48% from $83 billion in May 2024 to $123 billion in May 2025. BTC options volume on CEXs almost doubled from the value a year ago. However, the options volume on decentralised exchanges (DEXs) dropped by 50% in the past 12 months.
• Crypto options on TradFi exchanges also saw strong growth. Chicago Mercantile Exchange (CME)’s options on BTC and ETH futures monthly trading volume increased by 19% in the last 12 months, reaching more than $5 billion in May 2025. Cboe’s Bitcoin US ETF Index (CBTX) and Mini Bitcoin US ETF Index (MBTX) options’ monthly trading volume surged by 188% year-to-date, respectively, reaching a combined $1.8 billion in May 2025.
• The complicated nature of options trading has limited the growth of the crypto options market. Crypto.com offers user-friendly, intuitive crypto options products like UpDown Options, Strike Options, and Dual Invest  to broaden market participation and reduce entry barriers. 
• The growth of crypto options is also constrained by their high liquidity requirements for constructing strategies, making them less accessible than spot or perpetual futures for directional trading. Despite these challenges, options are valuable for hedging, and we anticipate the market will continue to grow, driven by institutional adoption and innovative products that leverage options’ complex strategies, while providing user-friendly experiences.

Interest Rate Derivatives and Pendle

Interest rate derivatives enable investors to hedge macroeconomic risks by reducing uncertainty on rates. However, access to these tools is mainly restricted to institutions and managed by centralised authorities, limiting availability for retail investors and lacking transparency. Pendle Finance innovates by allowing users to tokenise and trade the yield component of yield-bearing assets separately from the principal, unlocking new liquidity and yield management strategies.

Key Takeaways:

• Interest rate derivatives (IRDs) are crucial in global financial markets, enabling investors to hedge macroeconomic risks by reducing uncertainty on rates (e.g., bank interest rate). The notional value of IRDs exceeded US$579 trillion in 2024, making them the largest component of the over-the-counter (OTC) derivatives market. However, access to these tools is mainly restricted to institutions and managed by centralised authorities, limiting availability for retail investors and lacking transparency.
• Pendle has introduced an innovative way to bring IRDs into decentralised finance (DeFi) by splitting yield-bearing assets into the principal token (PT), which represents the underlying asset, and the yield token (YT), which represents the future rewards generated by that asset. The combined price of these tokens equals the price of the underlying asset.
• Pendle’s yield trading fills the missing piece of the interest rate trading market in TradFi and offers more powerful tools than just interest rate swaps with its innovations:
  • Liquidity: Users can sell or trade the yield portion (YT) without unlocking the principal asset, increasing capital efficiency.
  • Yield Management: Enables strategies like locking in fixed yield (by holding PT), investing on future yield (by trading YT), or hedging against yield fluctuations.
  • Time-Decay AMM: Pendle’s Automated Market Maker (AMM) accounts for the time-dependent value of yield tokens, helping to prevent mispricing due to yield decay over time.
• While Pendle remains a powerful tool for yield trading, the complexity of Pendle’s mechanisms poses a steep learning curve and risks. One key assumption is that historical APY could reliably imply the future yields, which may not hold true in volatile or rapidly changing markets. Additionally, YTs on Pendle are generally priced higher at launch because of optimistic yield expectations. If the market fails to sustain or increase the underlying asset’s yield, the returns from YTs may not justify their initial cost, leading to potential losses.

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4. Alpha Navigator

This institutional-focused report dives into macro trends, market-neutral pairs, style-factor screens, and events. Read the full Alpha Navigator report here.

• Most asset classes increased in May, with crypto leading price increases. Ethereum’s Pectra mainnet upgrade went live on 7 May, and BTC reached an all-time high on 22 May. These coincided with multiple tariff updates in the month.
• BTC’s one-month performance correlation turned positive with most benchmarked assets, except the S&P 500, Nasdaq-100, and US Core Aggregate Bond.

5. Crypto Conference & Economic Calendar

Crypto Conferences Calendar

Economic Calendar

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Research & Insights Team