Major institutional investors, including Bitcoin ETF holders and corporate treasuries, are constructing a massive $1.5 billion defensive position in the derivatives market, purchasing long-dated put options to protect against a potential price drop below the critical $60,000 support level. According to Jean-David Péquignot, Chief Commercial Officer of derivatives exchange Deribit, these entities are actively buying 6-month and 1-year put options with strike prices at $60,000 or below as portfolio insurance.
The open interest for these specific put contracts has surged to $1.5 billion, representing the highest concentration across all strikes and expiries on Deribit, which accounts for nearly 80% of global crypto options activity. Each contract on the platform represents one Bitcoin. This hedging activity is particularly significant because the involved parties—ETF holders and public companies—collectively control a substantial portion of Bitcoin's circulating supply. U.S. spot Bitcoin ETFs alone hold approximately 1.26 million BTC (roughly 6% of supply), while publicly listed firms hold about 1.14 million BTC (5.7% of supply).
Péquignot noted that despite Bitcoin's recent price climb to near $67,500, the options market remains cautious. "While spot price climbed, the 25-delta risk reversal remained stubborn. 30-day puts are still trading at a ~7% volatility premium over calls, signaling that smart money is still paying up for downside protection rather than chasing the pump," he stated. This indicates that sophisticated investors are prioritizing risk management over speculative gains.
The mechanics involve these institutions paying a premium for the right, but not the obligation, to sell Bitcoin at $60,000, effectively capping potential losses if the price falls sharply. The long-dated nature of the options suggests these investors are insuring against a sustained period of lower prices, not just a short-term dip. Péquignot added that volatility may increase if prices drop below $63,000, as dealers and market makers who are "short gamma" at $60,000 may be forced to sell to rebalance their exposure, potentially amplifying downward moves.
This unprecedented scale of institutional hedging marks a maturation of the cryptocurrency market, moving from speculative retail-driven activity to sophisticated risk management practices common in traditional finance. The behavior is a direct consequence of the influx of institutional capital via spot Bitcoin ETFs, whose managers operate under strict fiduciary and risk management mandates.
