Options Indicate Expectations of Bitcoin Falling Below $100,000

On the Derive.xyz derivatives platform, there has been a noted increase in investor interest in put options for Bitcoin and Ethereum with expiration on August 29. This suggests risk hedging against price declines by the end of the month, reports The Block.

A call option grants the right, but not the obligation, to purchase an asset at a set price before the contract’s expiration. A put option allows the sale of an asset under the same conditions.

Increased demand for the latter typically signals a desire to protect against asset price declines. This leads to negative skew: puts are priced higher than calls, reflecting heightened demand for market downturn protection.

Bearish Skew

According to Derive, the volume of put options for Ethereum expiring on August 29 exceeded calls by more than 10%. The most activity was recorded at strike prices of $3200, $3000, and $2200.

Analyst Sean Dawson believes this structure indicates pessimistic expectations—from moderate correction to more pronounced decline.

At the time of writing, Ethereum is trading around $3600. Over the past seven days, the asset’s price has fallen by 2.4%, according to CoinGecko.

For Bitcoin, the negative skew is more pronounced, noted Dawson. Open interest in put options expiring on August 29 is nearly five times that of calls. Almost half of the contracts are concentrated at the $95,000 strike, with another quarter near the $80,000 and $100,000 levels.

“[Investors] are massively hedging against a sharp drop below $100,000,” emphasized the expert.

Over the past seven days, the leading cryptocurrency has depreciated by 3.1%. At the time of writing, the asset is trading around $113,862, according to CoinGecko.

The skew between puts and calls indicates the popularity of hedging strategies. According to Derive, the corresponding 30-day indicator for Bitcoin has dropped from +2% to -2% over the month, and for Ethereum—from +6% to -2%.

The expected monthly volatility is about 35% for Bitcoin and 65% for Ethereum. The gap between the indicators has widened from 24% at the beginning of June to the current ~30%. This points to more significant price fluctuations for Ethereum in August, despite less pronounced bearish sentiment in the options structure.

Despite interest in risk hedging, Derive data indicates mixed investor expectations. The probability of Ethereum’s price falling below $3000 by the end of August is 25%. Meanwhile, the chances of rising above $4000 have increased from 15% to 30%.

According to Dawson, the probability of Bitcoin retesting the $100,000 level by the end of the month is 18%.

According to the publication, investors have become somewhat more cautious following the July meeting of the Fed. The regulator unsurprisingly kept the rate unchanged, noting persistent inflationary risks and economic uncertainty.

Back in late July, a whale bet $5 million on Bitcoin falling below $110,000.