Quick overview

Live BTC/USD Chart

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Bitcoin is plummeting, and traders are preparing for a loss. The biggest cryptocurrency in the world fell below $90,000 on Tuesday morning, intensifying a selloff that has wiped out all of its yearly gains. As wealthy buyers beat a retreat, traders in the options market are pessimistic, believing that the decline is far from over.

 

There has been an increase in demand for downside protection at the $85,000 and $80,000 levels. According to data from Deribit, a company owned by Coinbase, protective options that expire later this month are seeing particularly high activity. More than $740 million worth of contracts betting on further declines that expire in late November have been purchased by traders, far outpacing interest in bullish positions, after riding Bitcoin to its highs just weeks ago.

Companies referred to as “digital-asset treasuries” are businesses that acquired substantial cryptocurrency holdings earlier this year, hoping to turn their investments into profitable stock market positions. However, these companies have faced significant challenges. For instance, Michael Saylor’s Strategy, Inc. recently purchased an additional $835 million worth of Bitcoin, while some of his business colleagues are feeling increasing pressure to sell assets to protect their balance sheets.

 

This selling activity has created a market full of investors who are too deep in the red to make additional purchases but are not ready to accept their losses. As a result, there is a psychological overhang influencing market sentiment. According to a sentiment index from the data analytics platform CoinMarketCap, which tracks factors like price momentum, volatility, and derivatives, cryptocurrency users are currently experiencing “extreme fear.” This sentiment is further affected by broader economic factors. For example, traders are closely watching Nvidia Corp.’s earnings report on Wednesday, which could signal speculative and technological risks and shift expectations for potential gains.

 

Ether, the token associated with Ethereum, is particularly vulnerable. The second-largest cryptocurrency in the world fell to $2,946 on Tuesday, representing a more than 20% decline since early October. After a severe wave of liquidations earlier this month led to approximately $19 billion being wiped out in digital assets, the market overall has been in disarray. Data from Coinglass indicates that open interest in cryptocurrency futures contracts has decreased, particularly for smaller tokens like Solana, where positioning has dropped by more than half.