Bitcoin gave up some gains on Wednesday, suggesting the short-squeeze rally is fading.
Selling options, be it a put or a call, is better suited for institutions with ample capital and a high-risk tolerance.
The Arcane Research report says this downward trading indicates institutional investors are being “cautious” at the moment.
The U.S. central bank also increased estimates of coming inflation to 3% from the 2.2% projection in March, largely due to transitory factors.
Bitcoin tests $40K following positive comments from Tesla's CEO Elon Musk and hedge fund manager Paul Tudor Jones.
Bitcoin option's smile shows persistent fears of deeper drop and low expectations for a quick rally.
The long-term bullish bet is akin to buying a lottery ticket.
The options market is flashing signs of concern about an extended price sell-off.
"Max pain" for the May expiry is $50,000.
Seasoned traders sell options when the implied volatility is high and buy when volatility is low.
A bullish bet on the cryptocurrency was also the most crowded trade in January.
"Market makers were heavily short puts in the range of $52,000 to $50,000, and I estimate were forced to sell nearly 2,900 bitcoin," one trader said.
Bitcoin's price recovery fails to subdue fears of a deeper bull market pullback.
Increased demand for deep out-of-the-money call options is reflective of strong bullish sentiment.
Ether's options market saw record trading volume of $1.32 billion on Monday, far above bitcoin's $879 million.