​Traders brace for an August crypto pull-back as protection against $60,000 bitcoin dip becomes top trade

As July ends, the options market is reflecting a major shift in positioning. The $60,000 bitcoin BTC$63,665.35 put option, a position protecting against a price drop, is now the most popular bet on Deribit, the world’s largest crypto options exchange. As of this writing, that put had a notional open interest of $1.17 billion.

Traders buy puts to hedge against market declines. Bitcoin, the largest cryptocurrency, fell below $60,000 late last month, only to stage a recovery to $63,000 and higher in recent days.

What’s notable is that until yesterday, call options, or bullish bets, at strike prices of $70,000 and $72,000, were the most popular, each boasting a notional open interest of $2.5 billion. That was the result of heavy call buying in the lead-up to Wednesday’s Fed meeting. Essentially, some traders were betting the price would rise as high as $72,000 after the U.S. central bank’s interest-rate decision.

That didn’t happen, and probably catalyzed the closure of those bets during Friday’s 08:00 UTC expiry, which settled BTC and ether (ETH) options worth $10 billion. Notional open interest on the $70,000 call has fallen to $943 million, and on the $72,000 call to $888 million. While still significant, those levels are well below the $60,000 put.

Another interesting data point comes from seasonality. Since 2013, July has produced a median return of 8.61%. The price has risen by 8.9% this month, according to CoinDesk data. So far, so unexciting. But a positive July is usually followed by a negative August, producing a median return of -7.51%.

Median is useful here because it shows the typical outcome without being skewed by unusually large gains or losses that can distort the average. In markets like bitcoin, where a few extreme months can pull the mean up or down, the median often gives a cleaner read on what has happened most often.

That means the mood is bearish for BTC as we head into August. Stay alert!

Read more: For analysis of today’s activity in altcoins and derivatives, see Crypto Markets Today . For a comprehensive list of events this week, see CoinDesk’s “Crypto Week Ahead.”

• Major bitcoin wallet flaw drains 594 BTC in 25-minute sweep (CoinDesk): Roughly 594 bitcoin, worth about $38 million, was swept out of around 500 wallets on Friday in an attack traced to a flaw in how Coldcard hardware wallets generated their keys.
• Treasury yields follow oil prices lower as investors await fresh economic data (CNBC): U.S. Treasury yields followed oil prices lower on signs of a recovery in crude flows through the Strait of Hormuz and hopes for easing Middle East tensions.
• South Korea’s Kospi index jumps nearly 18% on a surge in chipmaking stocks (AP): South Korea’s Kospi equity benchmark jumped on Friday, tracking gains on Wall Street as artificial intelligence-related stocks rebounded after losses earlier in the week. U.S. stock index futures rose and oil prices fell.

The chart shows the distribution of notional open interest in bitcoin options at various strike price levels across a range of expiry dates.

Notional open interest refers to the dollar value of the number of active or open contracts, with one contract representing one BTC.

The $60,000 put, or protection against a price decline, is the new leader with an OI built up of $1.17 billion. The recent leaders, the $70,000 and $72,000 calls, have slipped lower in rankings.