Key takeaways:
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Rising demand for put options and miner BTC deposits highlights growing caution among traders despite price resilience near $108,000.
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Analysts at Bitwise argue that deep drops in market sentiment often precede rebounds, framing the correction as a “contrarian buying window”.
Bitcoin (BTC) fell to $107,600 on Thursday, prompting traders to question whether Friday’s flash crash signaled the end of the bull run that peaked at an all-time high on Oct. 6. A warning signal in Bitcoin’s options market has put traders on edge, especially amid rising miner outflows, testing the strength of the $108,000 support level.
The Bitcoin options delta skew climbed above 10%, showing that professional traders are paying a premium for put (sell) options, a sign typical of bearish sentiment. Under neutral conditions, this indicator usually ranges between -6% and +6%. More importantly, the skew has worsened since Friday, suggesting that traders are growing more doubtful about Bitcoin’s bullish momentum.
US President Donald Trump’s confirmation that the trade war with China remains ongoing has also weighed on market sentiment. Trump has threatened to further restrict trade with China following its suspension of US soybean purchases, according to Yahoo Finance. Another factor adding pressure is the uncertainty surrounding US economic data amid the ongoing government shutdown.
Demand for downside protection strategies on Deribit surged on Thursday as trading volumes for put options exceeded call options by 50%, a sign of mounting market stress. The indicator climbed to its highest level in over 30 days. Cryptocurrency traders are typically optimistic, so a neutral reading for the put-to-call ratio tends to sit around -20%, favoring call options.
Bitcoin derivatives merely reflect the worsening US macroeconomics
Bitcoin wasn’t the only market affected by investors’ shift in sentiment, as seen in gold’s new all-time high on Thursday. Demand for short-term US government bonds also spiked, even as two Federal Reserve Governors signaled further interest rate cuts in October — a move that typically reduces the appeal of fixed-income investments.
Yields on the US two-year Treasury dropped to their lowest level in more than three years, showing that investors are willing to accept smaller returns in exchange for the security of government-backed assets. Meanwhile, gold climbed to $4,300, up 23% since September, pushing the value of central banks’ gold reserves above their holdings of US Treasurys, according to Reuters.
Despite positive developments in the tech sector, including chipmaker TSMC’s (TSM) upgraded 2025 outlook and strong quarterly results from Bank of America and Morgan Stanley, the S&P 500 fell 0.9% on Thursday. The Dow Jones US Select Regional Banks Index slid 4.4% after two financial firms reported losses in the private-credit market, 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 also raised concern. Data from CryptoQuant shows that miners deposited 51,000 BTC (worth over $5.5 billion) on exchanges over the past seven days, the largest outflow since July. The analysis noted that such behavior often precedes price weakness, as miners have historically been among Bitcoin’s largest holders.
While the warning from Bitcoin’s options market points to fear of further correction, Bitwise analysts said that extreme drops in sentiment have often “marked favorable entry points,” adding that “the recent correction was driven largely by external factors.” Bitwise head of research André Dragosch added that Friday’s liquidation event has set the stage for a “contrarian buying window.”
Further downside for Bitcoin remains possible, but the surge in demand for put options should not necessarily be seen as a sign of sustained bearish momentum, as external factors have simply made traders more risk-averse.
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.
