Bitcoin Traders Pay $1M for $70,000 Puts, Signaling 40% Price Drop

A significant bitcoin options trade on Deribit has highlighted growing concerns over the declining price of Bitcoin. A trader recently paid over $1 million for $70,000 put options expiring on April 25, indicating a bearish sentiment in the market. This substantial investment in put options, which give the holder the right to sell Bitcoin at a specified price, suggests that the trader anticipates a further decline in Bitcoin's value.

The distribution of put options bets on price declines is concentrated at lower price points around $80,000, indicating that market participants are preparing for potential downside risks. The current "max pain" point, which is the price level at which the most options contracts will expire worthless, sits at a lower level, further emphasizing the bearish outlook.

This bearish sentiment is not isolated; it reflects a broader market concern over the declining price of Bitcoin. The significant premium paid for these put options underscores the level of caution and pessimism among traders. The concentration of put options at lower price points suggests that many market participants are bracing for a continued downward trend in Bitcoin's value.

The high premium paid for these put options also indicates that traders are willing to pay a substantial amount to hedge against potential losses. This behavior is typical in markets where there is a high degree of uncertainty and risk. The fact that the trader is willing to spend over $1 million on these options highlights the seriousness of the concern over Bitcoin's price decline.

Other notable trades included a put ratio spread, featuring long positions in the $75,000 strike put and double short positions in the $70,000 put; and a risk reversal, involving a long position in the $90,000 call and a short position in the $70,000 put. The bearish flow in the $70,000 put follows purchases of put options expiring April 4 in the $78,000 to $85,000 range last week and increased demand for the $76,000 put option expiring on April 25. Broadly speaking, BTC puts are trading at a premium to calls, exhibiting downside sentiment out to the May-end expiry, as evident from the negative values in risk reversals.

The bias for puts offering downside protection likely reflects investor anxiety surrounding the expected reciprocal tariffs announcement. An aggressive move could weigh on risk assets, including cryptocurrencies. This significant trade highlights the substantial risks and uncertainties in the Bitcoin market, as traders prepare for potential downside movements.