Traders prepare for Bitcoin's sharp decline: surge in open interest for put options

Zhitong
2024.03.23 00:19
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Traders are preparing for the continued decline of Bitcoin, leading to a weakening demand for Bitcoin ETFs. In the past 24 hours, the trading volume of Bitcoin put options has exceeded call options, pushing up the put/call ratio, indicating a bearish outlook in the short term. Bitcoin has dropped by more than 10%, and spot Bitcoin ETFs are also facing outflows. The pullback of Bitcoin contrasts sharply with the rebound in the stock market, making traders more optimistic about the Fed's interest rate cuts this year. The decline in Bitcoin may not be as severe as the previous pullback

According to the information from Zhitong Finance and Economics APP, option data shows that traders are preparing for a continued decline in Bitcoin, leading to a weakening demand for Bitcoin ETFs. In the past 24 hours, the trading volume of Bitcoin put options expiring on March 29 exceeded that of call options. According to data from the cryptocurrency options exchange Deribit, this has raised the put/call ratio, indicating a bearish outlook in the short term. The put/call ratio is a key indicator of market sentiment for the underlying asset. On this platform, the strike prices of put options are concentrated around $50,000 and $45,000. On Friday, the trading price of Bitcoin was around $63,500.

David Lawant, research director at cryptocurrency brokerage firm FalconX, stated: "Today's market adjustment is mainly driven by significant outflows from the Bitcoin trust Grayscale Bitcoin Trust (GBTC.YS). Net inflow data for spot ETFs as of yesterday shows outflows for the second consecutive day since these products were launched on January 11."

Bitcoin has dropped more than 10% from its all-time high, marking one of the largest declines this year, with 10 spot Bitcoin ETFs about to see their largest outflows since inception. According to Coinglass data, over $177 million in call bets were closed in the past 24 hours.

The pullback in Bitcoin contrasts sharply with this week's stock market rebound, as traders are more optimistic about the Fed's interest rate cuts this year. Chris Newhouse, DeFi analyst at Cumberland Labs, said: "Ahead of the Federal Open Market Committee meeting, we see digital assets also reacting to positive macroeconomic news. However, driven by specific product outflows and liquidations, the correlation between Bitcoin and stocks has weakened, seemingly driving the decline in Bitcoin and Ethereum."

However, after several rounds of liquidation in recent months, the funding rate for perpetual futures contracts, indicating the leverage level of crypto trading, remains relatively low, suggesting that Bitcoin's current decline may not be as severe as previous pullbacks. On Monday, the high leverage of long positions accelerated Bitcoin's plunge, with over $582 million in long liquidations. The total liquidation amount exceeded $738 million

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