ChainCatcher reported that according to The Block, analysts said that with the recent price correction of Bitcoin, traders' demand for downside protection has increased, which is reflected in the increase in the number of put options.
According to data from Deribit, the put/call ratio for open interest in Bitcoin options expiring on Friday has risen above 1, which is considered a bearish signal for the market. A ratio above 1 means that significantly more puts than calls are traded. This suggests that more investors are betting or hedging against falling prices rather than rising prices.
“The increase in Bitcoin options open interest was primarily due to an increase in relative put open interest, which is consistent with the asset’s recent price correction, as Bitcoin options traders increased their downside bets and hedges. Bearish The spike in /call volume ratio and the one-month 25-delta option skew suggest a significant increase in demand for downside protection," ETC Group wrote in a note.
The report also noted that Bitcoin option implied volatility has increased during the recent decline, with one-month at-the-money Bitcoin options currently trading around 50.5% implied volatility. “The term structure of volatility is also now inverted, with short-term options having significantly higher implied volatility than longer-term options, which tends to be an extremely bearish signal in the options market,” ETC Group analysts added.
