On Wednesday, Bitcoin (BTC) prices plummeted to a four-month low, reaching as low as $81,000, as the anticipated “Trump bump” in the markets faded. This has prompted investors and traders to hedge against further decreases, with Bitcoin options indicating a notable interest in put options with a strike price of $70,000.
Bitcoin Plummets 20% Since Trump’s Inauguration
According to data from Deribit, the largest crypto options exchange, this strike price represents the second-highest open interest among all contracts set to expire on February 28, with a total of $4.9 billion in open interest poised to expire by Friday.
Since President Donald Trump’s inauguration in January, Bitcoin has experienced a substantial decline of roughly 20% from its record highs.
Market analysts attribute this downturn to a combination of factors, including Trump’s “aggressive geopolitical” stance and ongoing concerns about elevated inflation.
Chris Newhouse, director of research at Cumberland Labs, noted, “Tariff policies are further dampening the outlook, and stubbornly high short-term inflation expectations add to the overall caution.”
Newhouse also highlighted that the Bybit Ethereum (ETH) hack has not only exerted downward pressure on Bitcoin’s price but has also negatively impacted overall market sentiment.
Investors Pull Back Amid Declining Demand For ETFs
The market has also witnessed a significant liquidation of bullish bets, with around $2 billion wiped out over the past three days, according to data from Coinglass.
Bitcoin perpetual futures—a popular method for offshore investors to leverage their positions—saw a sharp decline in long positions during this timeframe.
Adding to the bearish sentiment, demand for Bitcoin exchange-traded funds (ETFs) has waned, with the group experiencing approximately $2.1 billion in outflows over the past six days.
This reflects a broader trend of investors pulling back, with more than $1 billion withdrawn from spot Bitcoin ETFs on Tuesday alone, marking the largest outflow since these funds debuted in January of the previous year. The Fidelity Bitcoin Fund (FBTC) and BlackRock iShares Bitcoin Trust ETF (IBIT) were among the hardest hit.
Bohan Jiang, head of over-the-counter options trading at Abra, commented, “This is a mix of spot selling and basis unwind. In my view, nearly all of this is from ETF spot outflows from directional traders.”
Ethereum has also felt the impact of the Bybit incident, amplifying its volatility, while Solana (SOL) has surrendered gains achieved in recent months amid declining interest in memecoins.
The market’s search for a new catalyst to reverse its bearish sentiment has led many investors to remain on the sidelines, rotating out of cryptocurrencies in a risk-off environment.
Ravi Doshi, co-head of markets at crypto prime broker FalconX, stated, “The crypto market is still in search of a new catalyst to reverse bearish sentiment.”
Currently, BTC is attempting to find support at $84,578, but has fallen another 4.5% in the 24-hour time frame.
Featured image from DALL-E, chart from TradingView.com
