Traders in the crypto space are gearing up for potential price drops in Bitcoin (BTC) and Ethereum (ETH) this August, as per options data from Derive.xyz indicating a bearish sentiment prevailing.
Bitcoin’s bearish outlook
Data shared with CryptoSlate reveals that open interest in Bitcoin put options expiring on Aug. 29 is nearly five times higher than call options. Typically, investors opt for call options when they anticipate a price rise and put options when they expect a decline.
Notably, around 50% of Derive’s put activity centers around the $95,000 strike, with an additional 25% split between $80,000 and $100,000 strikes.
Further backing this sentiment is the data from Deribit, a key centralized derivatives exchange, where put options at $110,000 and $95,000 strikes account for over $2.8 billion in open interest, indicating a growing belief in a move below the six-figure mark.
Moreover, the options skew has shifted from +2% to -2% over the past month, underlining an increasing inclination towards downside protection.
This shift aligns with probability models suggesting an 18% chance of BTC revisiting $100,000 before the end of the month.
Ethereum’s rising volatility
Ethereum is also witnessing a rise in bearish sentiment, albeit to a lesser extent than Bitcoin. Derive data shows that for the Aug. 29 expiry, put options outnumber calls by just over 10%.
The highest concentration of put activity is observed around the $3,200, $3,000, and $2,200 strike levels, indicating traders are bracing for potential declines in Ethereum’s price.
Additionally, ETH’s 30-day skew has shifted from +6% to -2%, reflecting a similar trend of heightened interest in downside protection.
While Ethereum’s monthly volatility remains higher at 65% compared to Bitcoin’s 35%, suggesting a potentially bumpier ride for ETH in the coming weeks.
Considering these factors, traders on Derive have assigned a 25% probability of ETH dropping below $3,000 this month. However, with recent price recoveries, the likelihood of closing above $4,000 has doubled to 30% over the past week.
