With the post-election “Trump bump” fading, Bitcoin (BTC-USD) options activity suggests investors are preparing for a potential price drop. The latest data indicates increased hedging against a decline to levels last seen after Election Day, reflecting market uncertainty.
Investors Brace for Bitcoin’s Decline
According to Deribit, the largest cryptocurrency options exchange, open interest in put options with a $70,000 strike price ranks second highest among all contracts expiring on February 28. A staggering $4.9 billion in open interest is set to expire this Friday, signaling heightened caution among traders.
Bitcoin has plunged nearly 20% from its all-time high following Donald Trump’s January inauguration. Market volatility has been fueled by concerns over his aggressive trade policies, persistent inflation fears, and a record-breaking Bybit exchange hack that sent shockwaves through the crypto sector.
Crypto Market Sees Heavy Liquidations
Market sell-offs have accelerated, with over $425 million in liquidated positions within just four hours on Wednesday, per Coinglass data. In the past three days, more than $2 billion in bullish bets have been wiped out. Bitcoin perpetual futures, a preferred instrument for leveraged trading, have seen a steep drop in long positions.
Bitcoin extended its losses for a fourth consecutive day, tumbling 5.6% to $83,744, marking a 13% decline over the period—its largest four-day slump since August. Meanwhile, Ethereum (ETH-USD) and Solana (SOL-USD) have taken even steeper hits, with losses ranging between 7% and 10%.
Bitcoin ETFs Face Record Outflows
Adding to the bearish sentiment, Bitcoin exchange-traded funds (ETFs) have witnessed $2.1 billion in outflows over the past six days, as investors take a cautious stance. On Tuesday alone, over $1 billion was pulled from spot Bitcoin ETFs—the biggest single-day outflow since their January 2024 launch.
The Fidelity Wise Origin Bitcoin Fund (FBTC) and BlackRock’s iShares Bitcoin Trust ETF (IBIT) led the outflows. Ethereum ETFs also saw significant withdrawals, totaling $130 million.
Market Outlook: Searching for a Catalyst
“The lack of a strong bullish catalyst is keeping investors on the sidelines,” said Ravi Doshi, co-head of markets at FalconX. Meanwhile, Chris Newhouse, director of research at Cumberland Labs, emphasized that recent market jitters stem from a combination of tariff policies, inflation concerns, and security breaches like the Bybit hack.
Ethereum’s volatility has also intensified due to the Bybit incident, while Solana’s decline is linked to fading interest in memecoins, which previously drove short-term gains.
Conclusion
With mounting bearish pressure and uncertainty surrounding Bitcoin ETFs, inflation, and trade policies, the cryptocurrency market remains in flux. Traders are closely watching for the next major catalyst that could reverse sentiment and reignite bullish momentum.
