Why Is a “Volatility Skew” Common in Cryptocurrency Options Markets?

A volatility skew is common in cryptocurrency options because market participants typically demand higher premiums (and thus imply higher volatility) for OTM put options than for OTM call options. This reflects the market's fear of a sharp, sudden downside move (a crash) in the highly volatile crypto assets.

This imbalance in demand for downside protection creates the characteristic "skew" in the implied volatility curve.