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The True Picture Emerges After Bitcoin's Sharp Drop: What Do Options Tell Us?

After falling by approximately 35% in 8 days, Bitcoin's price has recovered by 15% from its low point, but options data shows that fear in the market has not yet fully dissipated.

While cryptocurrency markets experienced a sharp sell-off in a short period, Bitcoin (BTC) showed a strong rebound. However, whether this recovery means investor confidence has returned is a matter of debate. At this point, data from the Bitcoin options market more clearly revealed the psychology behind the price movement.
Why did volatility explode and why is it important?

The "volatile" aspect of the option indicates how sharply its price can move. The last trades of the sell-off showed a 1-week implied volatility of 100%. This shows that the market believed the Bitcoin price could move extremely sharply in a very short period of time.
This type of volatility surge is usually seen during moments of panic. Investors try to quickly hedge against losses if the price falls further. This pushes option prices up.

Why is DVOL staying high?

DVOL is an indicator that measures the overall stress level in the Bitcoin market. Although DVOL has fallen somewhat since the price bottomed out, it is still around 65. Last week, this value was in the 40s.

This difference is significant because a high DVOL indicates that the market is still "not relaxed." In other words, investors believe that sharp movements may continue and remain cautious.
Why are put options expensive?

Put options are like insurance against price declines. Recent data shows that short-term put options are approximately 28 percent more expensive than call options. This is one of the highest levels seen since 2023.

This indicates that investors are still seriously considering the possibility of another sharp decline and are willing to pay more for protection.

Why are investors still on the defensive?

Over 73 percent of option transactions in the last 24 hours were put options. This means that a large portion of investors took positions against the risk of a decline, not with the expectation of a rise. Call transactions only increased slightly after the price bottomed out.

The weekly put-to-call ratio of 1.3 also supports this picture. As long as this ratio remains above 1, the perception of downward risk will be dominant in the market.
Why does a recovery not mean risk-on?

The rise in Bitcoin price indicates that panic selling has stopped, but the options market is still cautious. Volatility is high, downside hedging is expensive, and investors are predominantly on the defensive.

In short, the recent recovery shows that the market hasn't relaxed, only that selling pressure has temporarily eased. Options data suggests that uncertainty persists in Bitcoin and investors are still acting cautiously.
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