BTC options indicate a shift to bearish trading

BTC options trading points to more protections against another bearish move. As Deribit open interest grows to $38B in October, another large weekly options expiry looms. 

BTC options traders point to more bearish attitudes. The weekly Deribit options expiry event points to more protections against a downward price move. The recent open interest on Deribit expanded to over $38B, as the month passed with accelerated options activity. 

On Friday, BTC options with a notional value of $4.88B will expire for BTC, with another $948M in ETH options. The event is slightly larger compared to the previous week’s expiry, as the market also looks forward to the monthly expiry for October. 

BTC options are expiring at a maximum pain of $117,000, though it remains improbable for the price to push to that level. ETH options have a maximum pain at $4,050, close to the current price levels and a more probable shift to the slightly higher level. 

Ahead of the weekly event, BTC sank to $110,758, while ETH traded at $3,990.93. The market remained weak as more profit-taking and bearish trading erased the mid-week recovery. The crypto fear and greed index sank to 28 points, down from 34 points a day ago, now solidly in the ‘fear’ range. Neither BTC, nor ETH attempted a bigger short squeeze, instead shifting downward again. 

BTC options traders seek downside protection

The weekly options positions changed quickly as the market switched to more fearful trading. In the past 24 hours, bearish trades have returned, with another $1.15B in options flowing into put options. 

Analysts noticed large traders and market traders are trying to mitigate significant downside risk. The current weekly options trading also points to events similar to the market drop weekend on October 10-11. 

Options buying has turned into another strategy to mitigate bigger price moves. The shift in put options is seen in the nearest options expiry events, while longer-term options still have a dominance of call options. 

Put options are now one of the main tools to hedge against another rapid market downturn. The options expiry, however, may shift the trading sentiment. 

BTC shifts to a lower range

BTC open interest remained slightly lower at $33B. The latest price moves led to a series of long liquidations. Over $80M in BTC longs were liquidated, as well as $1,165.6M of ETH long positions, as the token dipped under $4,000 again. 

Based on open interest, BTC is now in a range between $111,000 and $113,000. Even with a short squeeze, BTC may not be able to shift to a higher price range. 

Following a series of records in early October, BTC is now down around 4% net for the month. The Uptober narrative is questioned, as traders remain much more cautious. 

Spot selling also accelerated, with miners moving 51,000 BTC to exchanges in the past week. While BTC is still in demand, short-term whales are using the spot market to avoid holding through drawdowns.

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