Bitcoin traders now see a 31% chance that BTC will end Christmas below $70K.
Bitcoin options traders have become dramatically more defensive.
The probability that BTC will end Christmas below $70,000 recently jumped from about 15% to 31% on Derive.
At the same time, the probability of Bitcoin finishing above $80,000 dropped from 53% to just 26%.
Traders also pay more for consequence protection.
The volume of Bitcoin options on Derive reached about $418 million last week, an increase of 37%, while put options accounted for about 55% of the traded premiums.
This is a big change in positioning.
But there is another side to the story.
Open interest in Bitcoin perpetual futures climbed to about 353,000 BTC even as the price fell.
This combination can create conditions for a violent move.
Important: Heavy leverage does not tell us which direction Bitcoin will move.
This tells us that the market is vulnerable.
If BTC falls further, leveraged longs can be eliminated.
If Bitcoin recovers sharply, dense bearish positions can be squeezed out instead.
The market is positioning itself more and more for cons.
This can make the next turnaround just as violent as the sale.