This is an excerpt from CoinDesk newsletter 'Daybook.'
As July ends, the options market is reflecting a major shift in positioning. The $60,000 bitcoin BTC$63,253.28 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.
That didn’t happen, and probably catalyzed the closure of those bets during Friday’s expiry.
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.
That means the mood is bearish for BTC as we head into August.
