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Crypto traders are bracing for possible price drops in Bitcoin (BTC) and Ethereum (ETH) this August, as options data from Derive.xyz indicates a distinct inclination towards bearish strategies.
Bitcoin bearish sentiment
As per data provided to CryptoSlate, the open interest in Bitcoin put options set to expire on Aug. 29 is nearly five times greater than that of call options.
Typically, investors purchase call options when they predict an increase in the asset’s price. In contrast, they opt for put options when they foresee a decrease in the asset’s value.
Significantly, around 50% of Derive’s put activity is focused on the $95,000 strike, while an additional 25% is distributed between the $80,000 and $100,000 levels.
Further validation is found in data from Deribit, a prominent centralized derivatives exchange, where put options at the $110,000 and $95,000 strike prices represent over $2.8 billion in open interest.
This indicates that traders are increasingly wagering on a move below the six-figure threshold.
Additionally, options skew, which measures the cost comparison between puts and calls, has shifted from +2% to -2% over the last month, indicating a rising demand for downside protection.
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This change in sentiment corresponds with probability models that assign an 18% likelihood to BTC revisiting $100,000 before the month concludes.
Ethereum volatility rises
Ethereum is also witnessing a rise in bearish sentiment, albeit to a lesser extent than Bitcoin.
Data from Derive reveals that for the Aug. 29 expiry, put options exceed calls by just over 10%.
The most significant concentration of put activity is around the $3,200, $3,000, and $2,200 strike levels, indicating that traders are preparing for potential mild declines as well as more substantial drops in Ethereum’s price.
Moreover, ETH’s 30-day skew has decreased from +6% to -2%, reflecting a similar trend of increasing interest in downside protection.
At the same time, Ethereum’s monthly volatility remains elevated, with an anticipated volatility of 65%, compared to Bitcoin’s 35%. This suggests that Ethereum may face a more turbulent path than Bitcoin in the upcoming weeks.
In light of this, crypto traders on Derive have assigned a 25% probability to ETH falling below $3,000 this month. However, following recent price recoveries, the chances of a close above $4,000 have increased to 30% over the past week.
The post Bitcoin and Ethereum traders prepare for August slump as put options dominate appeared first on CryptoSlate.
