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(Bloomberg) — With the so-called Trump bump fading across markets, Bitcoin (BTC-USD) options are showing that investors and traders are hedging against a decline in the cryptocurrency to levels last seen just after election day.
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The open interest, or the number of outstanding contracts, for put options with a strike price of $70,000 is the second highest among all contracts expiring on Feb. 28, according to data from Deribit, the largest crypto options exchange. A total of $4.9 billion in open interest is set to expire on Friday.
Bitcoin has tumbled roughly 20% from a record high since Donald Trump’s January inauguration, as his combative stance against allies and geopolitical rivals alike shakes investor confidence, and concerns about elevated inflation linger. The crypto sector was also shook by a record hack of the Bybit exchange last week.
“Tariff policies are further dampening the outlook, and stubbornly high short-term inflation expectations add to the overall caution,” said Chris Newhouse, director of research at Cumberland Labs. “The Bybit exchange hack has exerted additional downward pressure on price and negatively impacted sentiment.”
Liquidations of long and short crypto bets accelerated on Wednesday, with about $425 million of positions wiped out over four hours alone as of around 3:30 p.m. in New York, according to data compiled by Coinglass. More than $2 billion of bullish bets were liquidated over the past three days. Bitcoin perpetual futures, one of the most common ways for offshore investors to add leverage, saw a sharp drop in long positions during the period.
Bitcoin fell for a fourth consecutive day, dropping around 5.6% to $83,744 ,bringing its decline of the period to around 13%. That’s the biggest four-day slump since August. Other tokens such as Ether (ETH-USD) and Solana (SOL-USD) continued to be hit harder, with each down between 7% and 10%, respectively.
The most recent price decline was also likely due in part to waning demand for Bitcoin exchange-traded funds. As a group, the funds have seen about $2.1 billion in outflows over the past six days.
“This is a mix of spot selling and basis unwind,” said Bohan Jiang, head of over-the-counter options trading at Abra. “In my view, nearly all of this is from ETF spot outflows from directional traders.”
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