Blockchain analytics firm Glassnode has released new insights into Bitcoin’s options market, indicating that traders remain cautious despite the cryptocurrency recovering after briefly falling below its February low and rebounding from its June low.
According to the data, the recent selloff triggered a short-lived increase in volatility expectations. At-the-money implied volatility (ATM IV) for one-week options rose sharply, with one-week implied volatility briefly reaching 65% as Bitcoin broke below its February support level. However, the increase quickly subsided, with short-term volatility returning to around 40%, suggesting market participants viewed the decline as a contained event rather than the start of a broader market disruption.
Demand for downside protection also surged during the selloff. One-week options skew, a measure of investor preference for protective put options over calls, climbed from 12% to 28% as traders sought hedges against further declines. The indicator later retreated to roughly 12%, indicating that the immediate rush for protection has eased.
Glassnode’s analysis showed that the gap between implied and realized volatility has largely disappeared. One-month realized volatility increased from 27% to 41% following the market decline, while one-month implied volatility fell back toward 41%. This convergence suggests that actual market movements are now closely aligned with what options traders had been pricing in.
Despite the normalization in volatility metrics, options flow continues to reflect a defensive market stance. Over the past seven days, put options accounted for approximately 30% of premium traded, compared with 20% for call options. Similar activity has been observed during the last 24 hours, indicating that demand for downside protection remains elevated even after the market stabilized.
The report also highlighted the positioning of gamma exposure in the options market. The largest concentration of negative gamma is currently located around the $65,000 level, slightly above Bitcoin’s spot price near $63,800. Additional short gamma positions are clustered between $65,000 and $70,000, a setup that could amplify upward price movements through dealer hedging activity if Bitcoin reclaims those levels.
Overall, Glassnode concluded that the market has largely absorbed the initial shock from the recent decline. While volatility and hedging demand have normalized from their peak levels, options positioning continues to reflect a cautious outlook, with traders maintaining defensive exposure despite Bitcoin’s recovery.
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