The Bitcoin market is exhibiting heightened caution as a significant volume of put options, particularly at a $40,000 strike price, signals strong demand for downside protection. According to data from crypto derivatives exchange Deribit, the nominal value of the $40,000 put options expiring on February 27 has reached approximately $490 million, making it the second-largest strike by open interest.
This buildup comes as Bitcoin (BTC) has continued its downward trend, recently falling to the $60,000 level. The market remains divided on direction, with some analysts forecasting further declines and others suggesting $60,000 could be a local bottom. In this environment of sustained volatility, options traders are actively hedging against potential losses.
A substantial batch of Bitcoin options is set to expire by the end of the month. The total nominal value expiring is about $7.3 billion. The current "maximum pain" point—the strike price that would cause the maximum financial loss to option holders—is $75,000, with about $566 million in notional value concentrated at that level.
While call options still outnumber puts overall (63,547 call contracts versus 45,914 put contracts), the significant open interest in the low-strike $40,000 put, with an open interest rate of 0.72, underscores a pronounced appetite for insurance. This positioning highlights a market that, while maintaining some expectations for a recovery, is prioritizing protection against a steeper correction as it approaches the February 27 expiry date.
