Mounting anxiety is palpable in Bitcoin options markets as traders brace for potential further declines. A surge in bearish sentiment suggests a cautious outlook, hinting at possible price drops ahead.
Recent analysis indicates a significant increase in bearish activity, with large-scale put option transactions accounting for a substantial portion of total market activity. These trades are primarily concentrated in short-dated, out-of-the-money puts, particularly those expiring this week and later in October, with a high volume of activity between the $10,400 and $10,800 strike range.
The options skew, which measures the relative cost of puts versus calls, has become more negatively biased, especially for short-term contracts. The deepening of this negative bias mirrors levels observed during the market crash on October 11, signaling heightened fear among major market participants, including market makers, regarding potential market declines.
Analysts at Greeks.live noted the options market was showing clear signs of fear. The data suggests that institutional players and market makers are positioning defensively amid rising volatility. Some analysts suggest purchasing put options as a defensive strategy may be prudent given the current volatile conditions.
This bearish sentiment in the Bitcoin options market could have a spillover effect across the broader cryptocurrency market, potentially leading to further downside. Bitcoin has been facing selling pressure after being rejected at $115,000, struggling to maintain support around $110,000.
Adding to the concerns, funding rates for Bitcoin perpetual futures contracts on Binance have recently experienced an unusual three-day negative run for 2025, reflecting downward momentum. Data also indicates an increasing volume of deposits to exchanges and a high percentage of market sell orders.
Despite the prevailing bearish sentiment, some analysts point to potential positive catalysts. Historically, October has been a strong month for Bitcoin, with average gains of 20% since 2019. Additionally, the possibility of a Federal Reserve rate cut later this month is fueling optimism for a potential late-month breakout.
Technical analysis indicates that Bitcoin is currently in a short term horizontal trend channel, reflecting investor uncertainty. Bitcoin has support at $109,600 and resistance at $113,400. A break upwards would be a positive signal, while a break downwards would be a negative signal.
Bitcoin's price is influenced by various factors, including market sentiment, regulatory developments, and global events. Monitoring these factors and the Bitcoin options market can provide valuable insights into potential future price movements.
