​Traders brace for an August crypto pull-back as protection against $60,000 bitcoin dip becomes top trade

Summary

As July concluded, the bitcoin options market on Deribit, the largest crypto options exchange, exhibited a notable shift toward bearish sentiment for August. The most popular position became the $60,000 put option, which offers protection against a price decline, with a notional open interest of approximately $1.17 billion. This reflects increased trader hedging amid bitcoin's recent price movement, having dipped below $60,000 before recovering to above $63,000.

Previously, bullish call options with strike prices at $70,000 and $72,000 dominated the market, each holding about $2.5 billion in notional open interest. This bullish positioning was largely driven by anticipation of the U.S. Federal Reserve's interest-rate decision. However, since the Fed meeting did not prompt the expected price surge, the interest in these high-strike calls has significantly decreased, with open interest dropping to $943 million for the $70,000 call and $888 million for the $72,000 call after a $10 billion options expiry on Friday.

Why it matters

Historical price seasonality data adds context to this shift in market mood. Since 2013, July typically sees a positive median return of 8.61%, aligning with this year's 8.9% July gain. However, August historically tends to bring a median negative return of -7.51%, suggesting a pattern of caution among traders going into the month. This seasonal trend, combined with the options market data, signals a more bearish outlook for bitcoin as August begins.