New York, February 29, 2024 — Bitcoin’s dramatic price slide has flipped the script on Wall Street, with bearish bets now as popular as those predicting a return to six-figure valuations.
Shifting Tides in the Crypto Market
Traders are increasingly bracing for further declines in Bitcoin, evidenced by a surge in put option contracts.
- Bitcoin has dropped nearly 10% this week, hitting nine-month lows.
- The dollar value of put options at the $75,000 strike price now rivals those at $100,000.
- This marks a significant shift from the bullish sentiment following Donald Trump’s election.
- Delays in crypto market structure legislation are adding to investor frustration.
The leading cryptocurrency by market value has tumbled almost 10% this week, reaching lows not seen in nine months—below $78,000—according to recent data. This price swoon has prompted traders to aggressively purchase put options, derivative contracts that act as insurance against potential losses, much like a health plan protects against medical bills.
What does this mean for Bitcoin’s future? The dollar value of active Bitcoin put options contracts at the $75,000 level, listed on Deribit, currently stands at $1.159 billion. This nearly matches the $1.168 billion in notional open interest locked into call options at the $100,000 strike price. Deribit is the world’s largest crypto options exchange by volume and open interest, where one contract represents 1 BTC.
Essentially, the $75,000 put option—a bet that Bitcoin’s price will fall below that level—is now as sought-after as the $100,000 call option, which has been the dominant play for weeks. The latter represents a belief that prices will climb back into six figures.
“There has been a massive surge in put buying over the past 48h (sensitivity at peak), right as BTC spot crashed from 88k to 75k. Options traders/hedgers,/funds, had these exact price ranges targeted with clear playbooks in place,” noted a pseudonymous observer known as GravitySucks in a recent post.
While the $75,000 put is the most popular bearish bet, significant open interest also exists in put options at $70,000, $80,000, and $85,000. Conversely, higher-strike call options, with the exception of the $100,000 option, are seeing comparatively less activity.
A Shift From Earlier Optimism
This current trend sharply contrasts with the market sentiment following President Donald Trump’s victory, when higher-strike call options consistently attracted more interest than lower-strike puts. That earlier bullish positioning was largely fueled by expectations that Bitcoin valuations would surge if Trump followed through on campaign promises of pro-crypto regulations.
Although the Trump administration did deliver on some of those promises, Bitcoin’s price rally stalled above $120,000 in early October and has been steadily declining ever since. The ongoing delay in passing a comprehensive crypto market structure bill has likely exacerbated investor frustration.
