Bitcoin Price Slump Triggers Bearish Bets in Options Market

Bitcoin's price slump has sent shockwaves through the options market, with traders bracing for a possible drop to $52,000. The cryptocurrency fell as low as $58,700 on June 24, local time, and its decline has pushed it to about 52 percent below its all-time high.

The $60,000 level had been a key price zone that the market defended throughout this year, but it finally broke after selling pressure returned. The area had acted as support since February and held in June, but traders quickly increased defensive positions to prepare for further downside risk.

Options volume for BlackRock's iShares Bitcoin Trust ETF (IBIT) neared 1.1 million contracts on the day, nearly double the recent 30-day average daily volume. Trading was heavily skewed toward put options, with about 275,000 put options bought and only 129,000 call option purchases.

Options premium flows also leaned bearish, with $144 million coming from put options out of a total IBIT options premium of $187 million. The most-traded contract was a put with a $32.50 strike expiring on the 24th, which would need Bitcoin to fall another 4.5 percent from current levels for it to move into profit.