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Growing interest in put options and BTC deposits by miners indicates increasing caution among traders, despite Bitcoin’s price hovering around $108,000.
Bitwise analysts suggest that significant dips in market sentiment often precede recoveries, viewing the current correction as a “contrarian buying opportunity.”
On Thursday, Bitcoin (BTC) dropped to $107,600, leading traders to speculate whether Friday’s sudden crash marked the conclusion of the bull run that peaked with an all-time high on Oct. 6. A troubling signal from Bitcoin’s options market has unsettled traders, particularly with rising miner outflows, which are testing the $108,000 support level.
The Bitcoin options delta skew has risen above 10%, indicating that professional traders are willing to pay a premium for put (sell) options, which is a typical sign of bearish sentiment. In neutral market conditions, this indicator generally fluctuates between -6% and +6%. Notably, the skew has deteriorated since Friday, signaling that traders are becoming increasingly skeptical about Bitcoin’s bullish potential.
The ongoing trade war between the US and China, confirmed by President Donald Trump, has also negatively impacted market sentiment. Trump has warned of potential further trade restrictions after China halted US soybean imports, according to Yahoo Finance. Additionally, the uncertainty surrounding US economic data amid the current government shutdown has contributed to this pressure.
On Thursday, there was a significant increase in demand for downside protection strategies on Deribit, with trading volumes for put options surpassing call options by 50%, reflecting rising market anxiety. This ratio reached its highest level in over 30 days. Generally, cryptocurrency traders maintain an optimistic outlook, so a neutral reading on the put-to-call ratio typically hovers around -20%, favoring call options.
Bitcoin derivatives merely reflect the worsening US macroeconomic landscape
Bitcoin’s struggles mirrored a broader investor sentiment shift, highlighted by gold achieving a new all-time high on Thursday. There was also a notable increase in demand for short-term US government bonds, despite two Federal Reserve Governors indicating the likelihood of further interest rate cuts in October, a development that typically lessens the attractiveness of fixed-income investments.
Yields on the US two-year Treasury have fallen to a three-year low, indicating that investors are willing to accept lower returns for the stability of government-backed assets. Meanwhile, gold prices soared to $4,300, up 23% since September, causing the value of central banks’ gold reserves to surpass their US Treasury holdings, according to Reuters.
Despite some positive trends in the tech sector—like TSMC’s (TSM) upgraded forecast for 2025 and strong quarterly results from Bank of America and Morgan Stanley—the S&P 500 declined by 0.9% on Thursday. The Dow Jones US Select Regional Banks Index fell 4.4% after two financial firms reported losses in the private-credit market, according to the Financial Times.
Related: SEC chair: US is 10 years behind on crypto, fixing this is ‘job one’
Recent transactions from Bitcoin miner-linked addresses have also raised alarms. Data from CryptoQuant shows that miners deposited 51,000 BTC (valued at over $5.5 billion) on exchanges over the last week, marking the largest outflow since July. This behavior is often seen before price declines, as miners are historically significant holders of Bitcoin.
While the signals from the Bitcoin options market reflect fears of further corrections, analysts at Bitwise note that extreme sentiment drops often “represent favorable entry points,” adding that “the latest correction stemmed primarily from external influences.” Bitwise’s head of research, André Dragosch, remarked that Friday’s liquidation event has created a “contrarian buying opportunity.”
Although further declines for Bitcoin remain a possibility, the heightened demand for put options shouldn’t be interpreted solely as a sign of enduring bearish trends, as external conditions have merely made traders more cautious.
This article is intended for informational purposes only and should not be construed as legal or investment advice. The views, thoughts, and opinions expressed herein belong solely to the author and do not necessarily reflect the opinions of Cointelegraph.
