"Can Bitcoin defend $70,000?... Options market sees increased betting on downside protection"

As Bitcoin (BTC) continues its downward trend recently, betting in the options market that Bitcoin will fall further to $70,000 is increasing.

On the 27th, Bloomberg reported, "As the Trump rally effect fades, open interest (OI) for $70,000 put options in the Bitcoin options market has recorded the second-largest volume among option contracts expiring on February 28." According to Deribit, the size of open interest for options expiring on the 1st of next month amounts to $4.9 billion.

Open interest refers to the number of contracts in derivative markets that traders have not liquidated. Generally, as open interest increases, the volatility of coin prices is likely to increase.

Chris Newhouse, research director at Cumberland Labs, analyzed, "The Trump administration's tariff policies are making market prospects darker," adding, "The rise in short-term inflation expectations is also increasing investor caution."

Meanwhile, there is also analysis that large-scale capital outflows occurred from Bitcoin (BTC) spot exchange-traded funds (ETFs) as hedge funds liquidated their arbitrage strategies.

Bohan Jiang, head of Abra OTC options trading, said, "This downtrend is a combined result of spot selling and 'basis trade' liquidation," adding, "Almost all outflows occurred through ETFs. It appears traders are clearing their positions."

Basis trade refers to an arbitrage strategy that uses the basis (price difference) between spot and futures prices. The explanation is that as recent arbitrage profits decreased rapidly, hedge funds liquidated their positions, and subsequently, capital outflows from ETFs increased.

The media added, "The recent large-scale capital outflows from Bitcoin spot ETFs are also intensifying downward pressure," noting, "In just one day on the 27th, a net outflow of $1 billion was recorded, marking the largest outflow since launch."