Why Is the Interest Rate Effect Often Ignored in Short-Term Cryptocurrency Options Trading?

The interest rate effect (Rho) is often ignored in short-term cryptocurrency options trading for two main reasons. First, the time to expiration is very short, and the interest rate component has a minimal impact on the option price over a few days or weeks.

Second, the extreme volatility of cryptocurrencies is the dominant factor in option pricing, overwhelming the small effect of the risk-free rate. The uncertainty and high cost of borrowing/lending in crypto markets also make the assumption of a single 'risk-free rate' problematic.