In a significant move reflecting rising caution in the cryptocurrency market, ETF holders and corporate treasuries are increasingly purchasing put options on Bitcoin amid concerns of a potential price decline below $60,000. This trend was highlighted by Jean-David Péquignot, chief commercial officer of the derivatives exchange Deribit, which has become a pivotal player in the crypto options landscape.
The put options being bought are specifically designed as protective tools that allow investors to sell Bitcoin at the predetermined price of $60,000, even if the market value drops significantly. This serves as a safeguard for long-term holders against the potential for sharper losses. At present, the demand for these $60,000 puts is notably high, with $1.5 billion in open interest reported—marking it as the most significant activity across all strike prices and expiration dates on Deribit.
Deribit commands a substantial portion of the global crypto options market, accounting for nearly 80% of all activity. The surge in interest surrounding these puts indicates growing unease among investors regarding the stability of Bitcoin, particularly as it has been trading in a volatile range below $70,000. The cryptocurrency recently hit lows near $60,000 earlier this month, and while it experienced a recovery to around $67,500, the options market sentiment reflects reservations about sustained upward momentum.
Despite the slight recovery in Bitcoin’s spot price, the options market shows a clear bias toward protective measures. Péquignot noted that the 25-delta risk reversal remains consistently unfavorable, with 30-day puts trading at a premium of approximately 7% over calls. This trend underscores that strategic investors are prioritizing downside protection over chasing potential price spikes, suggesting underlying fears about market stability.
Furthermore, as Bitcoin’s price nears the critical $60,000 mark, market volatility might intensify. Dealers and market makers, who play essential roles in maintaining market liquidity, are currently positioned as “short gamma” at this price level. This positioning implies that they might need to sell more Bitcoin to balance their exposure as prices approach the threshold, which could lead to an increase in downside volatility.
In the broader context, ETF holders have invested heavily in Bitcoin, with U.S.-listed spot Bitcoin ETFs and similar international products amassing inflows of approximately 1.26 million BTC, representing around 6% of Bitcoin’s total circulating supply. Additionally, publicly traded companies are holding about 1.14 million BTC, equivalent to 5.7% of the overall supply. This concentration of interests among significant players adds weight to the current sentiment regarding price protection.
As the cryptocurrency landscape continues to evolve, this strategic hedging behavior marks a critical shift for major investors like ETFs and corporations, signaling that while many are bullish in the long term, they are simultaneously keenly aware of the potential pitfalls in the near future.
