Bitcoin Shows Resilience, but Traders Hedge Crash Risk With $20,000 Puts
Bitcoin remained relatively stable during turmoil in global financial markets, suggesting continued support from spot buyers and long-term holders. Options markets, however, offer a clearer view of tail risk. Even without betting on an imminent decline, traders may buy low-strike puts to protect their portfolios against an extreme crash.
Ahead of this quarter’s options expiry, Deribit data showed about $800 million in open interest for Bitcoin puts with a $20,000 strike, making it the market’s third-most-popular strike. That does not mean traders expect Bitcoin to fall to $20,000, but it highlights continued demand for protection against a steep decline even as the market shows resilience.
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The history behind this eventBitcoin Holds Near $64,700 as Options Traders Add Downside Hedges
U.S.-listed spot Bitcoin exchange-traded funds have become a key conduit for institutional money entering the cryptocurrency market, making their subscription flows an important influence on near-term prices. Bitcoin’s volatility has recently compressed as the token trades in a narrow range at elevated levels, but derivatives positioning suggests investors have not dismissed the risk of a sharp move triggered by macroeconomic data.
Spot Bitcoin ETFs drew a combined $754 million of net inflows during the first week of August, helping keep the cryptocurrency near $64,700. Options traders nevertheless increased their use of downside protection, with put volume accounting for a larger share of recent activity. The shift points to continued caution before the release of U.S. employment data, even as steady ETF demand supports Bitcoin’s price.
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