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As July ends, the options market is reflecting a major shift in positioning. The $60,000 bitcoin put option, a position protecting against a price drop, is now the most popular bet on Deribit, the world’s largest crypto options exchange. As of this writing, that put had a notional open interest of $1.17 billion.
Traders buy puts to hedge against market declines. Bitcoin, the largest cryptocurrency, fell below $60,000 late last month, only to stage a recovery to $63,000 and higher in recent days.
What’s notable is that until yesterday, call options, or bullish bets, at strike prices of $70,000 and $72,000, were the most popular, each boasting a notional open interest of $2.5 billion. That was the result of heavy call buying in the lead-up to Wednesday’s Fed meeting. Essentially, some traders were betting the price would rise as high as $72,000 after the U.S. central bank’s interest-rate decision.
That didn’t happen, and probably catalyzed the closure of those bets during Friday’s 08:00 UTC expiry, which settled BTC and ether (ETH) options worth $10 billion. Notional open interest on the $70,000 call has fallen to $943 million, and on the $72,000 call to $888 million. While still significant, those levels are well below the $60,000 put.
Another interesting data point comes from seasonality. Since 2013, July has produced a median return of 8.61%. The price has risen by 8.9% this month, according to CoinDesk data. So far, so unexciting. But a positive July is usually followed by a negative August, producing a median return of -7.51%.
Median is useful here because it shows the typical outcome without being skewed by unusually large gains or losses that can distort the average. In markets like bitcoin, where a few extreme months can pull the mean up or down, the median often gives a cleaner read on what has happened most often.
That means the mood is bearish for BTC as we head into August. Stay alert!
Read more: For analysis of today's activity in altcoins and derivatives, see Crypto Markets Today . For a comprehensive list of events this week, see CoinDesk's "Crypto Week Ahead."
The chart shows the distribution of notional open interest in bitcoin options at various strike price levels across a range of expiry dates.
Notional open interest refers to the dollar value of the number of active or open contracts, with one contract representing one BTC.
The $60,000 put, or protection against a price decline, is the new leader with an OI built up of $1.17 billion. The recent leaders, the $70,000 and $72,000 calls, have slipped lower in rankings.