Following the strong rise in the cryptocurrency market last month, prices have calmed down, and investors have begun to take positions against the decline.
Options Data Shows Investors Hedging Against Bitcoin Drops Below $100,000 and Ethereum Below $3,000
According to data from options platform Derive.xyz, there has been a notable increase in the number of put options opened for Bitcoin (BTC) and Ethereum (ETH) in futures trading on August 29. This suggests that investors are hedging their bets, anticipating a decline by the end of the month.
According to a market update shared by Dr. Sean Dawson, Derive’s Head of Research, put positions are almost five times larger than call positions in BTC options due August 29.
These positions, particularly concentrated around the $95,000, $80,000, and $100,000 levels, reveal that investors are seriously anticipating that Bitcoin will fall below $100,000 again.
On the Ethereum front, put options are 10% more expensive than call options. The most popular levels are $3,200, $3,000, and $2,200. Dawson notes that this trend is consistent with expectations ranging from a moderate correction to a deeper pullback.
As of August 6, Ethereum was trading around $3,624, down more than 4% in the past week. Bitcoin, meanwhile, is trading at around $114,075, down 3% in the same period.
Decline in Option Slope, Increase in Volatility
According to Derive, the option “skew,” an indicator that measures how much downside protection investors demand, has fallen from +2 to -2 for Bitcoin and from +6 to -2 for Ethereum in the past month, suggesting a growing need for downside protection.
BTC’s monthly implied volatility is currently hovering around 35%, while ETH’s has reportedly reached 65%. Since the beginning of June, the volatility gap between the two assets has widened from 24 points to 30 points, suggesting a more volatile future for Ethereum.
Although investors are hedging their bets against the downside, Derive’s probability estimates paint a mixed picture. The platform estimates a 25% chance of Ethereum falling below $3,000 by the end of August and a 30% chance of it breaking above $4,000 (up from 15% last week). Meanwhile, Bitcoin has an 18% chance of testing $100,000 again by the end of the month.
*This is not investment advice.
