Key insights:
Increased interest in put options and miner BTC deposits indicate a growing apprehension among traders despite stable prices around $108,000.
Analysts at Bitwise suggest that sharp declines in market sentiment often signal upcoming rebounds, characterizing the correction as a “contrarian buying opportunity”.
Bitcoin (BTC) dropped to $107,600 on Thursday, leading traders to speculate whether Friday’s flash crash marked the end of the bull market that hit an all-time high on Oct. 6. A cautionary signal in Bitcoin’s options market has made traders uneasy, particularly with rising miner outflows, testing the resilience of the $108,000 support level.
The Bitcoin options delta skew surpassed 10%, indicating that professional traders are willing to pay a premium for put (sell) options, a typical sign of bearish sentiment. Under normal circumstances, this indicator typically ranges from -6% to +6%. Notably, the skew has deteriorated since Friday, indicating that traders are increasingly skeptical about Bitcoin’s bullish trends.
US President Donald Trump’s reaffirmation that the trade conflict with China continues has also impacted market sentiment. Trump has threatened further trade restrictions with China following its suspension of US soybean imports, according to Yahoo Finance. Additionally, uncertainty regarding US economic indicators amid the ongoing government shutdown is exerting further pressure.
Interest in downside protection strategies on Deribit surged on Thursday, with trading volumes for put options outpacing call options by 50%, indicating heightened market stress. This metric reached its highest level in over a month. Cryptocurrency traders typically maintain an optimistic outlook, so a neutral reading for the put-to-call ratio usually sits around -20%, favoring call options.
Bitcoin derivatives merely reflect deteriorating US macroeconomic conditions
Bitcoin wasn’t the only asset impacted by changing investor sentiment, as evidenced by gold reaching a new all-time high on Thursday. Demand for short-term US government bonds also surged, despite two Federal Reserve Governors indicating potential interest rate cuts in October — a move that typically diminishes the attractiveness of fixed-income investments.
US two-year Treasury yields fell to their lowest point in over three years, indicating investors’ willingness to accept lower returns for the safety of government-backed assets. Concurrently, gold rose to $4,300, a 23% increase since September, causing the value of central banks’ gold reserves to surpass their US Treasury holdings, according to Reuters.
Despite positive trends in the tech industry, including an improved 2025 forecast from chipmaker TSMC and strong quarterly results from Bank of America and Morgan Stanley, the S&P 500 dropped 0.9% on Thursday. The Dow Jones US Select Regional Banks Index fell 4.4% as two financial firms reported losses in the private-credit space, according to the Financial Times.
Related: SEC chair: US is 10 years behind on crypto, fixing this is ‘job one’
Movements from Bitcoin miner-linked addresses have raised eyebrows. Data from CryptoQuant reveals that miners have deposited 51,000 BTC (valued at over $5.5 billion) on exchanges in the past week, marking the largest outflow since July. The analysis highlighted that this trend often precedes price declines, as miners have traditionally been among Bitcoin’s significant holders.
While the indications from Bitcoin’s options market suggest potential fears of further corrections, analysts at Bitwise noted that significant drops in sentiment frequently “mark good entry points,” adding that “the current correction was mainly influenced by external factors.” Bitwise’s head of research, André Dragosch, stated that Friday’s liquidation event has created a “contrarian buying opportunity.”
Additional downturn for Bitcoin is possible, but the rise in demand for put options shouldn’t automatically be interpreted as a sign of prolonged bearish trend, as external factors have simply increased traders’ risk aversion.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
