Bitcoin collapsed to $58,700 on Thursday and now options traders are convinced it will fall to $52,000 before the year is out, its lowest level since August 2024.
The decline sent Bitcoin down nearly 52% from its all-time high and left the OG cryptocurrency below the $60,000 level, which traders have sought to defend throughout the year. This area has remained supportive for the price since February, and was defended again during the first two weeks of June before succumbing to an advance to just over $67,000.
The outlook for options trading does not look good at the moment. Investors are paying a lot to protect themselves, and most expect further downward movement if Bitcoin continues to fall.
This happened mainly on iShares Bitcoin Trust ETF (NASDAQ: IBIT), with trading volume on Thursday approaching 1.1 million contracts, nearly double the average daily volume over the past 30 days, according to Cboe Global Markets (CBOE) LiveVol.
Traders are buying as Bitcoin falls below the price level that bulls have continued to defend
IBIT trading was heavily skewed towards sell-offs. Thinkorswim data showed that traders bought about 275,000 points, while buying calls remained below 129,000 contracts.
Of IBIT’s total options premium of $187 million, $144 million came from sales, according to SpotGamma’s figures.
The most actively traded options were mostly bearish, with only one of the 20 most actively traded IBIT options being a call option. The most active option was selling at the strike price of $32.50, which expires on Friday. It’s required Bitcoin To decline by an additional 4.5% to become profitable.
However, implied volatility from IBIT stock is still far from reflecting the full market collapse, at 53, suggesting daily moves of roughly 3% in either direction.
The options available for July 31 represent the same possible situation. This indicates that there is a 48% probability that the IBIT price will be below $30.50 at the end of the following month. This means an additional drop of approximately 10% from the current price. The probability of a 10% increase was slightly higher at 55%.
Leverage turns Bitcoin sell-offs into a bigger problem for cryptocurrency markets
The pressure has gone beyond options desks. Cryptocurrency market data providers said nearly $450 million of leveraged long positions were liquidated in just 60 minutes during the morning decline.
This sell-off also came while cryptocurrencies failed to follow the stocks’ rally. In recent years, Bitcoin is often traded like a high-risk stock bet. This link now appears weaker. Bitcoin is down 32% this year, while Solana stock is down 47%. Both symbols have faced difficulties even when stock markets have risen.
One reason is retail demand. Small traders who usually ride the wave of cryptocurrency price fluctuations are now getting involved in AI-related stocks. This has led to a redirection of focus from cryptocurrencies to stocks resulting in significant price movements due to the news surrounding AI.
Bitcoin whale strategyMeanwhile, MSTR (NASDAQ:MSTR) had 505,000 puts versus 403,000 calls. Traders bought 83,000 calls, sold 72,000 calls, and bought just under 58,000 calls. This combination wasn’t exactly a love letter to risk.
The strategy now holds 847,363 BTC at an average purchase price of $75,651 per coin. With Bitcoin approaching $58,800, this position is about $14.3 billion below its cost basis.
Stocks were penalized. Since the flash crash last October, MSTR has lost more than 80% of its value. Since November 2021, shares have risen less than 22%, although Bitcoin has spent parts of that period reaching record levels.
With the current market structure, traders face different levels of downside targets. While some believe that Bitcoin will test the $50,000 level next, others expect more room for downward price movement before it bottoms at $30,000 or lower.
With the price of Bitcoin already falling below $59,000, $450 million worth of long positions erased in one hour, and the strategy down more than 80% from its crash-era level, options traders are taking $52,000 as a live risk for 2026.
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