As Bitcoin retreated to around $81,400, put options gained prominence in the options market despite the dominance of bullish positions, with the most interest concentrated in the contract at the $80,000 level.
According to data reported by CoinDesk, put option trading volume on Deribit over the past 24 hours was more than double that of call options. The most-traded contract was the October 30 put option with an $80,000 strike price. These contracts give investors the right to sell at a set price, offering a way to hedge against potential declines.
What stands out is that bullish expectations have not disappeared despite demand for hedging. Among the Bitcoin positions tracked by Coinalyze, longs accounted for about 55 percent, while the long/short ratio stood at 1.24. Open interest for the same October 30 expiry on Deribit was also weighted toward call options with strike prices between $90,000 and $100,000. This brought bullish expectations and precautions against downside risk to the fore at the same time.
The cost of hedging against a Bitcoin decline exceeds that of bullish bets
Options pricing also supports this cautious outlook. Across different expiries, the implied volatility of put options was 2.4 to 4 points higher than that of comparable call options. This difference indicates that investors are paying a higher premium for downside protection.
For example, in the October 30 contracts, the call option shown on the chart had implied volatility of 32.4 percent, compared with 34.9 percent for the put option. The difference widened to 4 points for the November 6 expiry.
Total open interest in Bitcoin fell 0.6 percent over 24 hours to $27.4 billion. The annualized funding rate remained around 8.8 percent, while CoinGlass’s BTC-USDT position ratio for top traders on Binance stood at 1.78, indicating that longs remained dominant.
Bitcoin and altcoins pull back despite ETF inflows
This positioning took shape as Bitcoin fell 0.5 percent to around $81,400 from 03.00 TRT on Tuesday, October 20. U.S. spot Bitcoin ETFs recorded their strongest daily net inflow in about a month the previous day, at $526.6 million. The strong inflow into BlackRock’s fund was also not enough to eliminate pressure on the price.
Ethereum fell 0.9 percent over the same period, retreating to around $2,385. Asian markets were pressured by chipmakers amid concerns over AI spending; South Korea’s Kospi index fell 3.73 percent, posting its lowest close since April 7.
Not investment advice.