The Bitcoin options market is exhibiting a level of bearishness not witnessed since the depths of the 2022 bear market.
It’s pretty crazy to think about. After all, Bitcoin is trading just above $110,000 at the time of writing; however, as the data I’ll show you today tells us the options market hasn’t been this long-term bearish since late 2022 when things like the FTX scandal were dominating headlines and people were speculating on it crashing back to the sub-$10,000 level.
The chart you see below is Bitcoin’s 25 delta skew, and the lines reflect 1-week, 1-month, 3-month, and 6-month dated contracts, respectively. When these readings show us a positive skew the percentage you see below on the left reflects how much more premium out-of-the-money puts cost for that expiry relative to out-of-the-money calls for the same expiration date.
For example, below we see that 1-week dated puts (blue line), which represent the September 11th expiration date, are currently trading at a 9.6% premium to calls, likewise with the 1-month dated puts (purple line), both of which reached their highest premium to calls since April last week, when Bitcoin was trading below $80,000.
What this information tells us is that the Bitcoin options market is heavily one-sided at the moment. There is a seemingly endless supply of call sellers, which is driving down call premiums, and an endless demand for put protection across all expiries which is increasing put premiums across the board.
As mentioned earlier, this is a level of imbalance across expiries we have not seen since late 2022 – early 2023 when nobody wanted to be long Bitcoin. As you’ll see on the chart below this is the first time since that period that we’ve witnessed both the 3-month and 6-month delta skew trade so heavily in favor of puts for such a prolonged timeframe, as historically demand for longer dated (green and yellow lines reflection 3-month and 6-month expirations) Bitcoin calls tends to far outweigh that of puts.
It’s a fascinating dichotomy when we pair it up against what has been an objectively bullish past few months for , despite the recent sell-off.
What this data tells us is that many are currently hedged, and/or net short hoping for lower BTC prices as we head into the home stretch of 2025.
Taking a look at how the market is positioned below across expiries, we can see the majority of these open put positions (yellow lines) rest below $110,000 (previous all-time high level) and the majority of the calls rest above $120,000.
These are the lines in the sand to keep in mind over the coming weeks, as a sustained break on high volume above or below either of those levels is likely to kick off a lasting bout of volatility as the options market scrambles to reposition for Q4.
It’s the type of positioning that can cause dramatic volatility in the market over the coming weeks, with the tail risks on both sides being elevated, and one we’ll be watching closely in the Highstrike trading room, where we’ve been utilizing a barbell approach on our BTC-benchmarked portfolio to actively outpace it.
This means holding assets with high beta to BTC on one half of the portfolio, and a strong buffer of cash on the other to protect against and even take advantage of large downturns.
As of September 1st, our members’ only portfolio has outpaced BTC by nearly 4.9% year-to-date. We hope to give you access and see you in the trading room for what should be a wild September ahead in the crypto market.
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