The open interest on bearish put options has risen to $2.52 billion as traders look for protection against a BTC price drop to the $40,000 to $50,000 range.
Bitcoin (BTC) has been trying to break the $60,000 resistance for the past 23 days. Generally, investors don’t seem too worried about this as they consider it a healthy consolidation period, and even recent analysis from JPMorgan Chase estimates that BTC price will reach $130,000. Even as most investors expect Bitcoin price to rise above $100,000, derivatives data shows $2.52 billion worth of ultra-bearish options from the $40,000 to $50,000 range?At the moment, there are multiple signals that the crypto market is overheating. There is an 11% BTC price premium in South Korean markets, and this week Cointelegraph reported that there are 100 cryptocurrencies with a $1 billion market capitalization.As a comparison, just two months ago, this figure stood at 51. The combined altcoin market capitalization surged to $800 billion from $450 billion in 60 days. Thus, buying protective put options makes sense, especially during these relatively low volatility periods.Bitcoin 30-day historical volatility. Source: TradingViewEven though a 60% average historical volatility is not mild, this is the lowest the metric has been in four months. To understand how high this figure actually is, one can look at the historical volatility of iShares expanded tech-software ETF (IGV), which currently stands at 42%, its highest in eleven months.Bitcoin’s high volatility causes options to trade at very high premiums, making buying downside protection quite costly. For example, a $44,000 put option for April 30 is currently trading at 0.007 BTC, equivalent …
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