Bitcoin did not crash over the past week. Furthermore, there was no extreme downward movement in price. Bitcoin traded around the $71k mark on Sunday, held between $66k to $70k the rest of the week, and precluded any mass panic from general investors; however, the professional options market has a different view of recent market developments, and hence provides a high degree of clarity for future expectations regarding the potential movement of Bitcoin through the use of this alternative trading strategy. Put option prices on Bitcoin were at 13% higher than call option prices on Thursday; this one number carries more information than any price chart analysis could produce, and understanding the underlying mechanics of this figure takes a moment to explain.<h2>What the 13% Put Premium Actually Means</h2>The delta skew metric provides insight into the relative costs of put options, as opposed to the relative costs of call options. Under a standard, balanced (neutral) marketplace, the skew should range from -6% to +6% with the following definitions:Negative skew means that traders are paying a premium for upside exposure.Positive skew means that traders are paying a premium for downside protection.The skew at 13% on Thursday is over two times the upper end of neutrality, thereby representing more than a small bias towards caution. It also indicates a strong bias toward bearish positioning among the most knowledgeable market participants regarding future price movement. What makes the current reading compelling is its tenure. It is not simply one ‘pop’ attributable to a particular news event. Over the last month, Laevitas data has shown that the skew has consistently remained at high levels for at least four weeks. Premiums for puts have been expensive for the past month, a clear indication that professional options traders rationally believe that there is substantial downside risk present in the market.<img src="https://jid.rerrkvifj.com/media/customer/creatorSystem/3a69f1ff-0ff5-476b-8c52-bc4322a0e1c2.jpeg"><h2>The Broader Context: Stocks and Gold Are Fine, Bitcoin Is Not</h2>Surrounding asset classes, like equities, have shown incredibly robust performance this week. Gold remains at record levels, steadily approaching historic highs due to the ongoing increase in institutional demand for safe haven assets. Given the macroeconomic environment of investors being able to maintain their overall risk positions and the increased utility of hard assets as a form of protection, we might expect to see Bitcoin perform much better, given its dual utility as both a risk asset and a hard asset. However, this has not occurred. The discounted put premium on BTC options illustrates that there are more intrinsic concerns about BTC price movements driving the current BTC options market vs. generalized concerns about the macroeconomic environment. Therefore, more specifically, we note that BTC investors and traders who are comfortable holding equities and gold are simultaneously hedging their downside exposure to BTC, indicating that there is something distinctly different about BTC's current technical and on-chain profile vs. an overall risk-off move by the macro asset class. One significant point of discussion around the $60,000 price level is that it provides a very large psychological and technical support area. A decline of roughly 10% from the current prices ($66,000-$67,000) to $60,000 is not typical relative to BTC's normal price movements but is substantial enough to corroborate the negative sentiment that traders are currently expressing through the BTC options market.<img src="https://jid.rerrkvifj.com/media/customer/creatorSystem/6f79c390-4ba3-4156-8fb5-cbcf75693c75.jpeg"> <h2>The Three Strategies Driving Options Volume</h2>According to Laevitas's breakdown of the last 48 hours of Deribit options trading, we see commonality in both the underlying sorority and professional trader’s positioning. The three significant strategies traded during this time that created an extension of the overall skew THRU the options market were; the bear diagonal spread, the short straddle and short risk reversal. These three unique strategies create three different flavors of the same sentiment and develop the collective view of how professional investors are positioned with there trades over the last 48-hours.<h2>Bear Diagonal Spread</h2>A bear diagonal spread offers investors an inexpensive way to express bearish sentiment. It consists of a longer-dated put option that gains value if the price declines, combined with a short-dated put option with a lower strike price, creating a sale to recoup some of the premium cost of purchasing the long-dated option (which would not have been available if this was not the case). Selling near-term stock options results in time decay at a much quicker rate than would normally be expected for longer-dated stock options; thus, selling this near-term option creates income on the trade that reduces the net cost of being bearish. While it is true that maximum profit is capped, for those seeking directional downside exposure without paying the full premium cost in an environment of high option leviathan prices and low/moderate time decay, this structure would provide a good alternative.<h2>Short Straddle</h2>A short straddle involves selling both a call option and put option at the same strike price. Therefore, if the underlying security does not move very much in value, then the straddle will be profitable by collecting premium from both options. So traders using this type of position are not specifically betting on a large drop in price, but instead are betting on low volatility and an inability for the price to move far from where the current price is over time, therefore they believe that Bitcoin will continue to trade sideways and not break through the previous high of $66,000 to the upside or downside during the week.<h2>Short Risk Reversal</h2>The brief risk reversal provides traders with the most directional aggressiveness out of the three. A trader sells a call option and has the proceeds to buy a put, creating a risk/reward profile to benefit from the downward price movement with very little cost upfront. The risk, however, is very high, since it has unlimited loss potential if the price of Bitcoin spikes aggressively to the upside. Traders who construct this structure have shown a strong belief that upside will be limited and downside more likely — an extremely bold assertion based on the vastly asymmetrical exposure that comes with using this strategy.<img src="https://jid.rerrkvifj.com/media/customer/creatorSystem/15feafda-608d-4772-b836-e5c79b48a00c.jpeg"><h2>What the Smart Money Is Actually Saying</h2>Separating what traders do versus what they say publicly is key to understanding options flow. This week, sentiment toward Bitcoin via social media is mixed. There has been a mix of bullish sentiment this week — with some bulls point to the fact that Bitcoin held the $66,000 level as support, and others are saying that the rejection of $71,000 was a clear failure. But all of that cuts through with options positioning. If put options trade at a premium of 13% for four consecutive weeks and the majority of the most popular strategies are bearish or neutral to bearish, the consensus among professionals is clear. While it does not mean that the price of Bitcoin will fall to $60,000, the vast majority of market's do not trade as the options positioning suggests that they will. The fact that put options have a significantly greater chance of downside movement compared to upside movement at current levels means that the participants in the market paying real money to hedge their exposure have determined that there is much higher risk to downside than upside at present price levels. This signals a much different sentiment than either retail sentiment surveys or social media activity. Options positioning has a cost to maintain. When there is a continued premium on put options for four consecutive weeks, that is a clear sign of conviction that has continued for that time frame, and it is not just a fleeting reaction to a bad day in the market.<h2>What to Watch</h2>The primary level to look at is $66,000. For four weeks $66,000 has shown good, stable support, but with option markets pricing in a valid possibility of $60,000 to come back against the support that is the initial line to watch. Therefore, once there is a break of support at $66,000, based upon how option professionals advance on this swing, it is very likely that their prevailing strategy has already been set up to be profitable in allowing for a swing down towards $60,000. Should BV come back and sustain above $70,000, the put premium will likely be compressed expeditiously as the option professionals close their respective puts. The primary indicators of this shift will be delta. In order for delta to migrate from 13% to neutral (tree under 6%), confirms that option market bearish sentiment by professionals has diminished and presents a leading indication of any upside movement in the price of BTC. Until that time arises, option market communication arrangements are very clear: caution is the prevalent position; and pricing in for $60,000 is a realistic opportunity in the option market as discussed.

Bitcoin held $66k–$71k last week—no crash. Pro options traders cautious: +13% put skew for 4 weeks signals downside bias. Bear diagonals, short straddles & risk reversals lead, eyeing $60k. 

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