Bitcoin Options Market Hits Three-Year High Amid Structural Distortions

The Bitcoin options market has reached an extreme defensive positioning since the FTX collapse in November 2022, despite the absence of any comparable fundamental crisis in crypto markets or the broader economy.

Binance Research's weekly report notes that this degree of hedging appears disproportionate, suggesting the market may be closer to a sentiment trough than a precipice. The BTC options 25-delta skew index has hit its most negative reading since November 2022, indicating a high cost of downside put protection versus upside calls.

The current divergence between Bitcoin and rising global M2 money supply has now extended beyond any prior episode in the dataset's history, according to Binance analysts. They attribute this gap to three overlapping structural distortions: dollar weakness mechanically inflating the dollar-denominated M2 aggregate without reflecting real liquidity growth; the post-ETF institutional ownership structure classifying BTC alongside software equities in risk management systems; and elevated real interest rates keeping large liquidity pools parked in money market funds.