Bitcoin Traders Bet on Drop Below $106K, Derive's Data Show

According to newly released data from Derive, an exchange for cryptocurrency derivatives, 70% of trading activity in the past 24 hours is centred around put options – contracts that make a profit when prices fall.  

In addition, nearly 20% of total open interest, which is the number of active, outstanding options contracts that have not been settled or expired, represents over $54 million in value, and is tied to put options expiring on 11 July. Currently, strike prices are $85,000, $100,000 and $106,000. 

Contrasting dynamics 

Notably, bearish sentiment on Derive contrasts with activity on the rival centralized options exchange Deribit, where traders’ positions appear more optimistic.   

On Deribit, investors have recently offloaded July puts (especially those below $100K) and instead bought call options contracts that profit when prices rise, with strike prices between $108,000 and $115,000. 

Derebit offered an explanation on X, noting that, “We observe the (red) dumping of no longer required 100k and below Puts in July and buyback (blue) of 108-115k+ Calls. With a calmer environment and upcoming July 4th US long weekend, more inventory was sold onto dealers.” 

Centralized vs decentralized

The divergence may offer insight into trading behaviour on centralized versus decentralized exchanges.  

Deribit’s institutional users appear bullish, reflecting institutional optimism and long-term positioning for continued upside after Bitcoin’s rally, while Derive, which caters towards decentralized finance (DeFi) savvy retail traders, may see its base hedging against short-term downside risk.  

It remains possible that some traders may even use the platforms against each other, buying calls on Deribit while ordering puts on Derive to hedge or arbitrage pricing differences. 

More puts

A put option is a financial contract that gives its holder the right but not the obligation to sell an asset at a specific price (the strike price) by a certain date. Investors often buy puts to hedge against losses or to speculate on a price drop.  

If the asset’s price falls to or below the strike price, investors may choose to sell, and profit based on the higher price at which the asset was trading when the option was purchased. If the asset’s price stays the same or rises, the option typically expires and the trader only loses the premium paid. 

The more puts being traded, the more bearish traders are likely to behave.