Bitcoin Traders on DEXs Brace for Downturn Despite Price Rally

In recent days, an interesting picture has emerged on decentralized Bitcoin trading platforms (DEXs): More and more Bitcoin traders are hedging against falling Bitcoin prices.

According to data from the on-chain options platform Derive.xyz, many market participants are currently focusing on put options with strike prices between $85,000 and $106,000 – despite Bitcoin’s recent price rally.

Bitcoin traders on DEXs position themselves for falling prices

According to Derive data, put options now account for over 70% of the trading volume on the platform. Specifically, around 20% of all open BTC options contracts (open interest) – with a value of over $54 million – are spread across the July 11 expiration dates and the aforementioned strike prices.

This means that many Bitcoin traders are anticipating increased volatility or a correction in the short term and want to hedge against price losses.

What are put options and why do traders buy them?

A put option gives you the right to sell Bitcoin at a fixed price until a specific date. Buying a put option is either betting on falling prices or seeking protection in case of a price crash. Especially after a strong rally—as recently seen with Bitcoin—it can be useful to lock in profits or protect yourself against unexpected market events.

Differences between DEX and centralized platforms

Also interesting is that the defensive sentiment on Derive.xyz contrasts with centralized exchanges like Deribit. Traders there are increasingly abandoning put options with low strike prices and increasingly betting on call options, i.e., on rising prices.

This demonstrates that there are different assessments of Bitcoin’s development between decentralized and centralized markets.

Macro uncertainties as a trigger?

One reason for the defensive positioning could be upcoming macroeconomic events or the fear of profit-taking after the sharp rise. Especially in uncertain market phases, experienced Bitcoin traders often resort to hedging strategies such as puts to protect their portfolios.

Conclusion: Security is paramount

The latest data from Derive.xyz clearly shows that many Bitcoin traders on DEXs are cautious, despite or perhaps because of last week’s strong performance. Whether this defensive stance is justified will become clear in the coming weeks. If you’re active yourself, you should closely monitor developments and regularly review your strategy.

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(Featured image by Kanchanara via Unsplash)

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