(Bloomberg) — Crypto traders are flocking to the options market to hedge against further price declines, as President Donald Trump’s planned tariff announcements next week keep financial market on edge.
The open interest, or the total number of outstanding contracts, for put options with a strike price of $80,000 is the highest among contracts expiring on April 4, or two days after Trump’s promised announcement, according to data from the Deribit options exchange. The rush into puts, which give holders the right to sell within a set period at a specific price, suggests growing demand for downside protection.
Bitcoin fell as much as 4.2% to $83,637 on Friday, erasing much of the recovery seen at the start of the week. It briefly dipped below $80,000 on March 13. Other smaller, less liquid tokens were hit harder on Friday. Ether, XRP and Solana’s SOL were all down about 7%.
The risk-reversal, or the difference between 25-delta calls and puts, is at its most expensive for the April 4 expiry, further signaling bearish sentiment, according to Caroline Mauron, co-founder of Orbit Markets. A risk reversal is a strategy where you buy a call option and simultaneously sell a put option with the same expiration date to limit downside risk.
The put-call ratio for the April 4 expiry on Deribit stands at 1.4, indicating a strong preference for put options, which provide protection against price declines. Other markets such as gold also highlight the growing concern.
“Spot gold surged to a record high above $3,080, signaling broader risk aversion, while Bitcoin’s put skews reached interim highs versus calls as traders are fully positioned for a bearish outcome in the near future,” said Augustine Fan, partner at SignalPlus.
Trump signed an order on Wednesday imposing a 25% tariff on auto and auto parts imports, set to take effect on April 3 further raising uncertainty.
“These tariffs could provoke retaliatory actions, escalating tensions not only with the US but also between other global trade partners,” warned Samer Hasn, senior market analyst at XS.com. “The risk of a full-blown trade war is real, which could further disrupt markets.”
Trump’s earlier trade victories played a role in pushing Bitcoin to an all-time high of $109,241 in January, but the fallout from his ongoing trade policies—particularly with close allies like Canada and Mexico—has led to a more than a 20% correction in the largest digital token.
More stories like this are available on bloomberg.com
