Bitcoin Traders Favor $80,000 Put Option Amid Market Volatility

Bitcoin traders are increasingly seeking downside protection as the $80,000 put option has emerged as the most popular bet on Deribit's options market. This marks a significant shift in sentiment from earlier this year when call options at higher strike prices were the most sought after.

As of the latest data, the $80,000 put option has 10,278 open contracts, representing a notional open interest of $864.26 million. This positions it as the most popular options play on Deribit, where each contract represents one BTC. This is a stark contrast to early January when the $120,000 call option was the most popular with nearly $1.5 billion in open interest, and last month when the $100,000 call option held the top spot.

The shift in positioning reflects traders' reassessment of upside expectations amidst market volatility and economic uncertainty. Bitcoin's price fell 11.66% in the first quarter, dipping below $80,000 at one point due to factors such as President Donald Trump's tariffs and disappointment over the lack of fresh purchases in the U.S. strategic reserve. The anticipated announcement of reciprocal tariffs by Trump later in the day has further fueled traders' pursuit of downside protection.

According to analytics firm Block Scholes, BTC volatility smiles have shifted sharply towards out-of-the-money (OTM) puts, reaching levels not seen since the US Banking Crisis in March 2023. This indicates a growing pessimism among traders who are positioning themselves for a potential downturn in Bitcoin's price.

Bitcoin is currently at a critical juncture, with the recent failure of bulls to reclaim the $90,000 level leading to a loss of momentum and a subsequent decline in price. The top cryptocurrency has experienced four consecutive days of losses, with its price dropping to $81,927, marking a 1.5% decrease in the past 24 hours. This shift in market sentiment is likely to continue influencing Bitcoin's price in the coming days and weeks as traders adjust their positions in response to changing market conditions.

The technical data points to a strong upside potential for Bitcoin, with the cryptocurrency currently trading at $93,768.47. However, the recent price action suggests that the market is still grappling with uncertainty, as investors weigh the potential for further gains against the risks of a downturn. The emergence of the $80,000 put option as the most popular bet is a clear indication of the growing pessimism among traders, and investors will need to carefully consider the potential implications of this shift in market sentiment as they navigate the volatile world of cryptocurrency investing.