FameEX Hot Topics | Traders Brace for More Pain as Bitcoin Options Markets Signal Rising Concerns

On Thursday, Bitcoin’s price dropped to $107,600, leading traders to question whether the flash crash on Friday marked the end of the bull run that peaked at an all-time high on October 6. This sharp decline has raised concerns among traders, particularly with a warning signal from Bitcoin’s options market, which, combined with rising miner outflows, is testing the strength of the $108,000 support level. Traders are now closely monitoring this critical threshold to gauge whether Bitcoin can maintain its upward momentum.

A key indicator of growing bearish sentiment in the market is the Bitcoin options delta skew, which climbed above 10%. This shows that professional traders are paying a premium for put options (used to bet on price declines), which is typically a sign of negative sentiment. In neutral conditions, this indicator usually ranges between -6% and +6%. However, the skew has worsened since Friday, signaling that traders are becoming more doubtful about Bitcoin’s ability to sustain its bullish run. This shift in sentiment highlights the mounting uncertainty surrounding the cryptocurrency's price movements.

The global economic environment is also contributing to the heightened market stress. U.S. President Donald Trump’s confirmation that the trade war with China continues has added further pressure. Trump’s threats to impose more restrictions on trade with China, especially after the country suspended U.S. soybean purchases, have weighed on investor sentiment. Additionally, the ongoing U.S. government shutdown has raised concerns about the reliability of U.S. economic data, further dampening market confidence and contributing to the growing sense of uncertainty.

Bitcoin wasn’t the only asset affected by the shift in sentiment. Gold reached a new all-time high on Thursday, reflecting the growing demand for safe-haven assets. Similarly, short-term U.S. government bonds saw a spike in demand, despite the Federal Reserve’s signals for further interest rate cuts. These moves indicate that investors are turning to more stable, lower-risk assets as concerns over the broader economic landscape persist. Yields on the U.S. two-year Treasury note dropped to their lowest level in over three years, highlighting investors’ preference for government-backed securities.

Another concern contributing to Bitcoin's weakness is the activity of miners. Data from CryptoQuant revealed that Bitcoin miners have deposited 51,000 BTC (worth over $5.5 billion) onto exchanges in the past week, the largest outflow since July. Historically, miners have been among Bitcoin’s largest holders, and such outflows often signal price weakness. However, despite these warning signs, analysts at Bitwise remain optimistic, noting that extreme drops in sentiment have historically marked favorable entry points. Bitwise's head of research, André Dragosch, suggested that Friday’s liquidation event could have created a “contrarian buying window,” indicating potential for a price rebound in the near future.

Disclaimer: The information provided in this section is for reference only and does not represent any investment advice or the official views of FameEX.