What Is a Volatility Skew in the Context of Crypto Options?

A volatility skew (or smile) describes the phenomenon where options with the same expiration date but different strike prices have different implied volatilities. Typically, out-of-the-money put options (lower strikes) on crypto like Bitcoin have higher implied volatility than at-the-money options.

This skew reflects the market's greater demand for downside protection (fear of a crash).