Bitcoin Options Market Hits Three-Year Extreme as Divergence with Global Money Supply Widens
The Bitcoin options market has reached its most defensive positioning since November 2022's FTX collapse, despite no comparable fundamental crisis in either crypto markets or the broader economy.
Binance Research reports that this extreme hedging is disproportionate to any current market conditions. The BTC options 25-delta skew index has hit its most negative reading since November 2022, suggesting a potential sentiment trough rather than a precipice.
Bitcoin's Realized Profit/Loss ratio has fallen below 1.0 for the first time since 2023, typically indicating forced capitulation rather than orderly distribution.
The current divergence between Bitcoin and rising global M2 money supply is at an all-time high in recorded history, attributed to three overlapping structural distortions: dollar weakness mechanically inflating the dollar-denominated M2 aggregate, post-ETF institutional ownership structure classifying BTC alongside software equities, and elevated real interest rates keeping large liquidity pools parked in money market funds.
Q4 13F filings show a net institutional outflow of roughly 25,000 Bitcoin-equivalent from ETF holdings. However, this breakdown is asymmetric: investment advisors and hedge funds accounted for the majority of sales, while governments, holding companies, and private equity were net buyers.