Recent data from Derive.xyz reveals a notable increase in investor interest in put options for both Bitcoin and Ethereum, with contracts set to expire on August 29. This trend is commonly interpreted as a sign of heightened risk aversion and a protective response to potential price declines in the near term.
Put options grant the right to sell an asset at a specified price before expiration, while call options provide the right to purchase. A surge in demand for puts often indicates investors are actively seeking downside protection, which results in negative skew - a condition where puts become more expensive than calls due to increased demand for market hedging.
Ethereum Put Options Show Mild Bearish Outlook
According to Derive’s data, put open interest for Ethereum exceeds call interest by over 10% for the August 29 expiry. The most active strike prices are concentrated around $3200, $3000, and $2200, signaling a forecast for potential short-term correction.
At the time of writing, Ethereum trades near $3600, down 2.4% over the past seven days. Analyst Shaun Dawson interprets the skew as indicative of moderate pessimism, with expectations ranging from mild pullbacks to a sharper price retracement.
Volatility indicators also support this forecast. Ethereum’s expected monthly volatility stands at approximately 65%, up from previous levels and significantly higher than Bitcoin’s 35%. The volatility gap between the two assets has widened from 24% in early June to roughly 30% now, suggesting traders predict Ethereum will experience larger price swings during August, despite less pronounced bearish positioning in the options market.
Bitcoin Shows Stronger Bearish Sentiment
Bitcoin exhibits a more pronounced negative skew. According to Derive, the open interest in puts is nearly five times higher than that in calls for the same August expiry. The majority of contracts are concentrated around a $95,000 strike, with significant volumes also near $80,000 and $100,000.
Bitcoin is currently priced at approximately $113,862, down 3.1% over the past week. Dawson notes that many investors are actively hedging against a potential drop below the psychological $100,000 level, reflecting broader concerns about short-term market weakness.
Supporting this perspective, Derive’s 30-day skew indicator for Bitcoin has declined from +2% to -2% within a month, mirroring a similar shift in Ethereum’s skew, which dropped from +6% to -2%.
Probabilistic Predictions and Market Reactions
Despite strong interest in protective strategies, investors' expectations remain mixed. Derive estimates a 25% probability that Ethereum will fall below $3000 by the end of August. Conversely, the probability of ETH rising above $4000 has increased from 15% to 30%, reflecting growing optimism among certain market participants.
For Bitcoin, Dawson forecasts only an 18% chance that the asset will retest the $100,000 level before month-end, indicating that while the downside risk is significant, a major breakdown is not the consensus scenario.
These probabilistic forecasts reflect an evolving sentiment landscape, influenced by macroeconomic signals and monetary policy decisions. Following the Federal Reserve's July meeting, where interest rates were held steady, investors have adopted a more cautious stance. The Fed cited persistent inflationary risks and general economic uncertainty as reasons for maintaining its position.
Institutional Hedging Reflects Market Caution
The derivatives market activity aligns with broader hedging strategies employed by institutional participants. In late July, a single entity placed a $5 million bet on Bitcoin dropping below $110,000 - a move that further underscores the prevalence of downside risk planning.
As the crypto market heads into August, traders are expected to monitor macroeconomic indicators, volatility trends, and derivatives positioning closely. While put-heavy skew patterns suggest a bearish leaning, the presence of upside forecasts points to a market still weighing multiple outcomes. In this context, the ability to accurately predict short-term moves remains limited, and the overall forecast for digital assets continues to shift alongside evolving sentiment.
