Options Market Turns Sharply Bearish

Data from Deribit shows total open interest in Bitcoin options at 43,905 BTC, representing a notional value above $4.79 billion. The put-to-call ratio stands at 0.83, signaling stronger demand for downside protection.

The max pain point — the strike level where most options expire worthless — sits near $116,000, suggesting traders expect limited short-term upside. According to Greeks.Live, short-term out-of-the-money (OTM) puts now account for roughly 28% of total options volume, reflecting the market’s strongest defensive stance since the October 11 pullback.

The options skew has turned deeply negative, highlighting aggressive hedging activity by market makers and liquidity providers. The shift underscores a growing sense of caution across digital asset markets as political volatility, tariff fears, and ETF discounts weigh on risk appetite.

Ethereum Under Pressure After Selini Capital Loss

Ethereum trades near $3,921, hovering below its max pain level of $4,100. Open interest stands at 251,884 ETH, with a put-to-call ratio of 0.81, mirroring Bitcoin’s defensive positioning.

Market sentiment weakened further following reports that Selini Capital suffered a $50 million loss tied to an unwind of a failed basis trade. The fund’s distress has shaken confidence in the derivatives market, with traders citing concerns over IBIT’s discount and limited catalysts for a near-term rebound.

Amid growing uncertainty, some participants are cautiously selling puts near perceived bottoms—a contrarian strategy aiming to profit from potential rebounds. However, Asian session flows remain predominantly bearish, reflecting sustained selling pressure.

Key Levels and Market Outlook

Analysts are watching $93,500 as a potential bottom and $100,000 as a short-term recovery zone for Bitcoin. Despite minor relief rallies, the broader narrative remains defensive, with traders prioritizing hedging and risk management over bullish exposure.

With options skew deeply negative across maturities and macro sentiment deteriorating, the next decisive move in crypto could still lean to the downside. Unless political turbulence eases or Selini’s liquidity issues stabilize, volatility is likely to persist into the coming weeks.

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This massive volume likely played a role in pushing Bitcoin to a new all-time high of over $94,000 on Nov. 19, 2024. A staggering 354,000 contracts were traded, with the majority focused on calls, betting on Bitcoin’s price increase. Balchunas pointed out that the contracts expiring in a month imply that traders are betting on Bitcoin doubling in value.

Options trading in the IBIT ETF allows investors to speculate on Bitcoin’s price movements, and with the bullish sentiment, it signals strong market interest. Market makers, in response to these options trades, were buying the spot ETF to hedge their positions, which led to large-scale purchases of Bitcoin.

As Grayscale also prepares to launch options for its own spot Bitcoin ETF on Nov. 20, the market is looking ahead to a potential surge in liquidity and a bullish outlook, with predictions that Bitcoin’s price could exceed $100,000 by year-end.

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According to a recent report by IntoTheBlock, a crypto analytics firm, Bitcoin miners have sold over 30,000 BTC (approximately $2 billion) since June.

This selling rate is the fastest observed in over a year. Analysts believe that the recent halving event triggered this sell-off due to the potential decline in profits.

QCP Capital expressed the pressure Bitcoin miners are currently facing. The post-halving break-even prices have put miners under significant pressure. As a result, miner BTC holdings have fallen to their lowest level in 14 years, with total reserves down 50,000 since the beginning of the year.

Adding to the market’s nervousness is the emergence of a new large supply pool. The German government is reportedly selling around 3,000 BTC, with another 47,000 BTC expected to be sold.

Despite the current market conditions, QCP believes that the volatile market is pointing to a bullish outlook towards the end of the year. QCP Capital’s trading desk observed a large amount of put option selling for sub-one-month maturities and aggressive call option buying from September to December. According to the firm, this suggests that the market is pricing in a summer consolidation period followed by significant movement towards the US elections.

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Cboe Exchange Inc., BOX Exchange LLC, MIAX International Securities Exchange LLC, Nasdaq ISE, LLC, and NYSE American LLC had filed applications with the SEC to allow options trading on spot Bitcoin ETFs in the U.S.

The SEC has delayed its decision on the applications and opened up a comment period for public feedback. The SEC is seeking feedback on issues such as whether options on spot Bitcoin ETFs should be subject to the same position limits as options on stocks, and whether the available supply in the markets for Bitcoin should be considered in setting position limits for options on Bitcoin ETFs.

The SEC had received some comments on the products in recent months, with some arguing that they would allow investors to better manage their risk.

The SEC approved spot Bitcoin ETFs in January. Grayscale CEO Michael Sonnenshein said that the next step should be to approve options as well:

“It’s logical that the next step, given the approval of spot Bitcoin ETPs to trade on NYSE Arca under the 19b-4 Rule, would be to approve options on spot Bitcoin ETPs.”

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