Bitcoin Options Market Hits Three-Year Extreme as Divergence with Global M2 Money Supply Widens

The Bitcoin options market has reached its most defensive positioning since November 2022, according to Binance Research's weekly report. This is despite no comparable fundamental crisis existing in crypto markets or the broader economy.

The current environment lacks a major exchange collapse, regulatory crisis, or systemic failure, yet investors are hedging at an extreme level. The BTC options 25-delta skew index has hit its most negative reading since November 2022, indicating a high degree of downside protection.

Binance Research notes that this degree of hedging may be disproportionate, suggesting the market is closer to a sentiment trough than a precipice. Bitcoin's Realized Profit/Loss ratio has fallen below 1.0 for the first time since 2023, typically a hallmark of forced capitulation rather than orderly distribution.

The report also highlights an unusual divergence between Bitcoin and global M2 money supply. Since 2015, Bitcoin and global M2 have diverged 23 times, but this current gap extends far beyond any prior episode in the dataset's history.