CoinDesk
Bitcoin options traders moved quickly to hedge downside after outflows from Binance began. The first major trade on Paradigm came about 15 minutes after the outflows and before the news was public: 250 October 31 $78,000 put contracts, each covering 1 BTC, with roughly $20 million in notional value. Another 250-contract block followed three minutes later at a price about 35% higher.
Why it matters
Paradigm handled around $590 million in notional BTC options blocks in the eight hours after the hack, about half of Deribit's total BTC options block volume over the same period. The flow leaned heavily toward puts, including two 1,000 BTC blocks of mid-November $74,000 puts that together represented about $155 million in notional value.
The strikes help distinguish insurance from a bet on a distant crash. Much of the put buying was clustered at $74,000 to $78,000, relatively close to spot, with expiries this week and in mid-November. That pattern points to traders seeking protection against a deeper near-term pullback.
Market impact
Bitcoin's one-week options skew briefly climbed as high as 18% during Asian trading Friday, indicating that puts were commanding a higher volatility premium than calls. Skews across time frames remained positive, signaling persistent demand for downside protection even after the short-lived peak.
Deribit also saw increased put activity, including a multi-leg November and December strategy worth around $190 million and 500 BTC blocks in November $64,000 puts. Other trades included March calls, showing that positioning was not uniformly defensive. Standard Chartered warned that weakness could persist, with a new price base potentially dependent on more information about the hack and the status of affected coins.
Frequently asked questions
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How soon did the first major Bitcoin options trade follow Binance outflows?
The first major trade hit Paradigm about 15 minutes after the first Binance wallet outflows, before the news was public.
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What did the first large put trade cover?
It involved 250 October 31 $78,000 puts, each covering 1 BTC, with about $20 million in notional value.
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Why did traders focus on puts near $74,000 to $78,000?
The strikes were relatively close to spot prices, suggesting protection against a deeper near-term pullback rather than only a distant crash.
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What did Bitcoin's one-week options skew indicate?
The one-week skew briefly reached 18%, indicating that puts carried a higher volatility premium than calls. Skews across time frames remained positive.
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Was all options positioning defensive?
No. While put activity increased on Paradigm and Deribit, some trades included March calls, so positioning was not uniformly defensive.
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