The cryptocurrency market experienced its most significant decline of the year last week: the price of Bitcoin fell from $105,000 to below $82,000, completely erasing the profits gained since the beginning of 2025. According to analysts, the average entry price for Bitcoin ETF investors is around $89,000, meaning most of them are currently facing losses.
This is reported by Business • Media
Panic in the Options Market and Risk Hedging
The asset’s price collapse coincided with the release of employment statistics in the U.S. — 119,000 new jobs were created in September, significantly exceeding the forecast of 50,000. Additionally, the market was unsettled by the absence of the October report from the Bureau of Labor Statistics, which participants interpreted as a signal that the Federal Reserve would not rush to lower the key rate in December. Recall that at the end of October, the regulator cut the rate by 0.25% for the second time this year.
Amid uncertainty, options market participants reacted predictably: “short-term volatility exploded,” and traders sharply increased demand for short bearish put options. The implied volatility of both Bitcoin and Ethereum exceeded peak levels following the collapse on October 10, forming an inverted term structure — a sign of prevailing fear of further declines.
Currently, Bitcoin traders are pricing in over 10% of volatility premium for put options with expirations over the next week.
Open Interest and Position Dynamics
Throughout the week, open interest in major tokens remained around $9 billion — nearly half of the $16 billion before the October drop. Retail traders on Bybit are hesitant to open new long positions, even despite the significant price decrease.
“We still see restrained interest in reopening positions that were closed in October.”
The drop of Bitcoin to $82,000 led to an increase in liquidations exceeding $1.9 billion. Experts note that the repeated decline of the asset below $90,000 has become symbolically significant: Bitcoin not only lost its annual growth and significantly lagged behind the dynamics of American tech stocks and gold, but most ETF investors also found themselves in the red. Furthermore, the drop to $83,000 triggered a new wave of hedging through out-of-the-money put options.
The report emphasizes:
“Testing levels last seen in April 2025 triggered a distinctly bearish reaction in the options markets.”
Despite the market partially “pricing in” the bearish slope, the overall sentiment remains decidedly negative. Meanwhile, analysts at JPMorgan predicted back in early November a potential rise of Bitcoin to $170,000 in the next 6-12 months, but the $94,000 level was identified as a key support zone. In turn, analysts at CryptoQuant believe that if the Fed does not lower the rate in December, the price of Bitcoin may remain in the range of $60,000-$80,000 until the end of the year.