Bitcoin ETF holders and corporate treasuries — the players everyone lauds for their long-term vision — are stacking insurance against price drops below $60,000, cryptocurrency exchange Deribit told CoinDesk.
“ETF and government bond holders are buying 6-month and 1-year puts at $60,000 or below ($60,000 put, a derivative contract that offers protection against potential price drops below this level) as portfolio insurance,” Jean-David Péquignot, commercial head of derivatives exchange Deribit.
This put option acts as insurance: It lets buyers sell bitcoin at $60,000 even if the price falls lower, protecting ETF investors and corporate government bonds with BTC from bigger losses while holding on for the long haul.
Péquignot responded to questions about increasing interest in the $60,000 put. At the time of writing, these contracts had $1.50 billion in open interest – the highest across all strikes and expirations on Deribit. On the exchange, one contract represents one BTC. The platform accounts for nearly 80% of global crypto options activity.
The rise in interest for $60,000 that expires in six months or longer signals deep fear that any price jump could falter quickly, paving the way for a sharper decline.
What makes this hedging even more remarkable is that ETF holders and corporate treasuries own a significant supply of bitcoin.
Investors have poured billions into US-listed spot bitcoin ETFs and similar products worldwide in recent years. The US funds alone have seen inflows of 1.26 million BTC, about 6% of bitcoin’s total circulating supply. Meanwhile, listed companies hold around 1.14 million BTC, or 5.7% of BTC’s supply.
Bitcoin has traded unevenly below $70,000, after hitting a low near $60,000 earlier this month, CoinDesk data shows. The cryptocurrency is up nearly 5% since Wednesday to trade near $67,500, but the options market remains unimpressed, with puts continuing to trade at a significant premium to calls or bullish bets.
“While the spot price rose, the reversal of the 25-delta risk remained stubborn. 30-day puts are still trading at a ~7% volatility premium over calls, signaling that smart money is still paying for downside protection rather than chasing the pump,” Péquignot said.
He added that volatility could increase as prices fall below $63,000. That’s because dealers and market makers that create order book liquidity are “short gamma” at $60,000 or lower.
This means that when prices approach $60,000, these units may sell more to rebalance their overall exposure to neutral, inadvertently increasing downside volatility.
