Traders are increasingly demonstrating caution in the cryptocurrency market, as reflected in the rising demand for put options and significant Bitcoin (BTC) deposits from miners. Despite Bitcoin’s price resilience near $108,000, which persisted through a recent downturn, analysts are warning that signals from the options market may indicate a shift in sentiment.
On Thursday, Bitcoin’s value dipped to $107,600, raising questions among market participants about whether a potential flash crash could indicate the end of the ongoing bull cycle, which reached an all-time high on October 6. This decline has tested the robustness of the $108,000 support level, bringing a critical spotlight to recent movements in the options market.
The Bitcoin options delta skew, which climbed above 10%, is one key indicator of the current sentiment among professional traders, as they now seem willing to pay a premium for put options—a trend that suggests increased bearish sentiment. Typically, this skew remains between -6% and +6% under neutral conditions, but the recent movement indicates growing skepticism toward Bitcoin’s upward trajectory.
Market sentiment has also been influenced by external factors, including U.S. President Donald Trump’s assertions regarding the ongoing trade war with China. His threats to impose additional trade restrictions following China’s suspension of U.S. soybean purchases have created further anxiety among traders, compounded by the uncertainty surrounding vital U.S. economic data amid a government shutdown.
On the trading platform Deribit, demand for downside protection surged, with trading volumes for put options surpassing those for call options by 50%. This spike indicates heightened stress in the market, bringing the put-to-call ratio to its highest levels seen in over a month. Generally, the cryptocurrency sector is characterized by optimism, with a neutral ratio typically around -20%, leaning toward call options.
This shift in sentiment is not isolated to Bitcoin. The broader market has responded similarly, with gold reaching a new all-time high and demand for short-term U.S. government bonds increasing, even as two Federal Reserve Governors suggested further interest rate cuts would occur in October. Such cuts typically decrease the appeal of fixed-income investments, yet yields on two-year Treasuries have plummeted to their lowest in over three years, as investors opt for the security of government bonds.
Interestingly, despite some positive news within the technology sector, including an optimistic outlook from chipmaker TSMC and strong quarterly reports from Bank of America and Morgan Stanley, the S&P 500 slipped by 0.9%. Additionally, regional banks suffered significant losses, highlighted by a 4.4% drop in the Dow Jones U.S. Select Regional Banks Index.
Addressing trader concerns, movements from Bitcoin miner-linked addresses have sparked worry. Recent data reveals that miners deposited 51,000 BTC—valued at over $5.5 billion—on exchanges over the past week, marking the largest outflow since July. Such actions often precede price declines since miners have historically been substantial holders of Bitcoin.
While the warning signs from the options market reflect a growing caution among traders, analysts from Bitwise have noted that these extreme shifts in sentiment can often pinpoint favorable buying opportunities. According to André Dragosch, head of research at Bitwise, the recent price correction appears largely driven by external pressures, and Friday’s market movements may open a “contrarian buying window” for investors looking to re-enter the market.
In conclusion, while further downturns for Bitcoin could be anticipated, the uptick in put options demand should be seen within the context of heightened external uncertainties rather than as a definitive signal of prolonged bearish momentum in cryptocurrency markets.
