$1M Premium in Bitcoin Put Option Trade Reflects Fears of Further BTC Price Decrease

Large Bitcoin Put Option Trade Indicates Bearish Sentiment as Market Eyes Potential Price Drop

A significant bitcoin (BTC) options trade on Deribit at the close of Q1 has raised concerns about potential price declines, with the trade revealing a strong bearish sentiment in the market. On Monday, a large block trade was executed, involving 1,180 contracts of a $70,000 put option set to expire on April 25. This trade came with a premium of over $1 million, according to Amberdata, suggesting that the trader is betting on a decline in bitcoin’s value from its current price of $84,000.

Put options, which grant the holder the right to sell an asset at a predetermined price by a specific date, are typically used by traders anticipating price declines. In this case, the trader appears to be predicting that bitcoin will fall below $70,000, reflecting a pessimistic outlook on the cryptocurrency’s near-term future.

Block trades are large, off-market transactions often negotiated privately, typically involving institutional investors looking to avoid disrupting the public market. This particular trade points to institutional involvement, signaling that larger investors are hedging against the possibility of further downside in bitcoin’s price.

Alongside this trade, other notable strategies have been observed, including a put ratio spread strategy, which involves holding long positions in $75,000 puts while simultaneously holding double short positions in $70,000 puts. Additionally, a risk reversal strategy, which combines long positions in $90,000 calls with short $70,000 puts, has also emerged, pointing to growing market uncertainty and a potential divergence in bitcoin’s future price trajectory.

Across the broader options market, put options are generally trading at higher premiums than call options, further suggesting a bearish outlook. Investors are likely positioning for downside protection amid growing fears of broader economic factors impacting cryptocurrencies. Specifically, market participants are watching closely for President Donald Trump’s anticipated announcement on reciprocal tariffs, which could exert downward pressure on risk assets like bitcoin.

The rising demand for downside protection through put options highlights the prevailing market anxiety surrounding bitcoin’s price direction and the potential for increased volatility in the coming weeks. With traders hedging against further declines, the market sentiment is skewed towards caution, signaling that more price drops may be expected in the near future.

About The Author

ctleditor

See author's posts