Between October 6, 2025, and February 6, 2026, bitcoin prices corrected approximately 50%. An acute phase of this sell-off took place between January 29 and February 6, 2026, during which prices dropped from ~$90,000 to ~$60,000. Market uncertainty at the peak of this move was reflected in the 25-delta implied volatility (IV) for both calls and puts; on February 5, these figures climbed to 75% and 95%, respectively, marking the highest readings since 2022. Although 25-delta put IV has since softened, it remains elevated relative to the 2025 average of 46%.

A significant surge in Bitcoin options trading preceded the onset of the sell-off on January 29, 2026. This spike highlights a migration toward our liquidity during periods of stress, particularly ahead of major market moves. Notably, January 28 represented the highest trading day for our Crypto options suite since February 2025.

The 25-delta risk reversal (RR) is calculated as the difference between call and put implied volatility, measuring the market’s willingness to pay for upside exposure vs downside protection. On February 5, 2026, the RR fell to -19.34, its lowest level since 2022. This move deep into negative territory indicated the strongest preference for puts over calls in more than three years, with traders paying a premium to hedge against further depreciation.

Moreover, the persistent negative RR observed since August 2025 indicates a sustained preference for downside protection. While BTC futures prices and the RR typically exhibit a positive correlation, a notable divergence occurred between June and October 2025. During this period, the RR trended downwards despite appreciating prices. This suggests that investors were prioritising the protection of unrealised gains which may serve as an indicator of a price reversal.

OI for active-month (February) contracts is relatively balanced, with $260 million in put OI against $230 million in calls. Conversely, assuming demand is driven by options buyers, the March expiry reveals a clear bullish tilt, with $660 million in call OI against $240 million in puts. This ~3:1 call-to-put ratio suggests that investors may be positioning for a recovery by the end of Q1. However, the June expiry reflects a more cautious sentiment, with more OI in the puts than calls.

An analysis of OI by strike price provides further insight into market expectations. Put OI is concentrated between $60,000 and $90,000, with particularly high OI at the $60,000 and $80,000 levels. Given bitcoin is currently trading ~$70,000, a large portion of these hedges are in the money.

There is also a notable cluster of out-of-the-money (OTM) call OI between $110,000 and $220,000. Given the distance from current spot prices, these positions likely represent call-overwriting strategies. Here, investors sell deep OTM calls to capitalize on high IV and generate yield within a sideways or gradually recovering market. Additionally, the $80,000 call strike has high OI, suggesting this level is a focal point for participants on both sides of the market.

CME Group Bitcoin options suite currently reflects a divided sentiment. While the risk reversal highlights persistent risk aversion and expensive downside protection, the concentration of March call OI and OTM call selling suggests a potential shift. Market participants appear to be using current volatility to position for a trend reversal or to lower their cost basis through yield-generating strategies.