Bitcoin Options Traders Signal Possible Further Downside After One of Year’s Largest Long Liquidations, Put Buying Rises

• Largest long liquidation this year wiped ~ $1.65B in longs

• Put-buying and delta skew have risen, indicating increased demand for downside protection

• Implied volatility stayed muted; experts cite Fed-driven “sell-the-news” dynamics and mixed cross-asset performance

Bitcoin options bearish skew: traders buy puts after liquidation, signaling downside risk; check positioning and delta skew for near-term market signals.

What is Bitcoin options bearish skew and why does it matter?

Bitcoin options bearish skew describes a market where implied volatility for out-of-the-money puts is higher than for calls, indicating traders pay more to hedge against declines. This skew matters because it reveals market sentiment, hedging demand, and potential short-to-medium-term downside expectations among options participants.

How did Monday’s liquidation event affect options positioning?

Monday’s sell-off triggered one of the largest long-liquidation cascades this year, removing roughly $1.65 billion in longs and $145 million in shorts. Despite that scale, implied volatility remained muted, while put-buying activity and the 1-week and 1-month put-call delta skew rose to levels not seen since early August, pointing to increased protective demand.

Why is put-call delta skew important for traders?

Put-call delta skew measures the difference in implied volatility between out-of-the-money puts and calls with the same expiry. A rising skew means investors pay a premium for puts. Market participants use this metric to gauge hedging pressure and to anticipate potential downside momentum.

What are experts saying about market direction?

Adam Chu, chief researcher at GreeksLive, noted muted implied volatility despite the liquidation. Sean Dawson, head of research at Derive, observed a “heightened demand for puts” as traders fear continued downward price action. Max Shannon at Bitwise Europe highlighted that 1-week and 1-month delta skew climbed to its highest level since early August, indicating the market is pricing in short-to-medium-term downside.

Frequently Asked Questions

How are macro factors affecting crypto options markets?

Macro catalysts, such as the Federal Reserve’s policy moves, influence cross-asset flows. Since Fed Chair comments in late August, S&P 500 and gold returned 3.68% and 12.41% respectively, while Bitcoin and Ethereum showed -1% and -3% over the same period (TradingView data). That divergence can pressure crypto risk pricing and increase demand for puts.

Key Takeaways

• Major liquidation impact: ~ $1.65B in long liquidations drove a large deleveraging event.
• Bearish options positioning: Rising put-buying and delta skew point to short-to-medium-term downside expectations.
• Volatility remains muted: Implied volatility did not spike, suggesting focused hedging rather than broad panic.
• Macro drivers matter: Fed commentary and cross-asset performance are key inputs for options pricing.
• Watch metrics: Monitor 1-week and 1-month put-call delta skew and net gamma exposure for directional signals.

How to interpret these signals (step-by-step)

1. Check put-call delta skew for short-term hedging pressure.
2. Observe implied volatility levels to see if the market expects large moves.
3. Review liquidation data to assess deleveraging magnitude and remaining open interest.
4. Factor macro events (e.g., central bank actions) into scenarios for directional bias.

Conclusion

Options markets show a clear bearish skew after Monday’s large long-liquidation event, driven by increased put-buying and elevated 1-week and 1-month delta skew. While implied volatility stayed muted, the positioning signals short-to-medium-term downside risk. Monitor skew, IV, and macro catalysts for the next directional clues and reassess positions accordingly.

Published: 2025-09-22 | Updated: 2025-09-22 | Author: COINOTAG