ETF Holders and Treasuries Hedge Against Bitcoin Price Drops, Says Deribit
By John Nada·Feb 27, 2026·7 min read
ETF holders and corporate treasuries are purchasing put options to hedge against potential Bitcoin price drops, reflecting growing market caution.
Market participants with long-term vision are now actively buying downside protection as Bitcoin approaches potential volatility. According to cryptocurrency exchange Deribit, ETF holders and corporate treasuries are purchasing six-month and one-year put options at the $60,000 level or below, effectively insuring their portfolios against a price crash. Jean-David Péquignot, chief commercial officer at Deribit, explained that these put options allow buyers to sell Bitcoin at $60,000 even if the market price falls lower, offering a safeguard for those holding Bitcoin long-term.
The demand for these put options is significant, with an open interest of $1.50 billion on the $60,000 strike, marking it as the highest across all strikes and expirations on Deribit. This exchange dominates the crypto options market, contributing to nearly 80% of global activity in this space. The surge in interest in the $60,000 puts, especially with contracts expiring in six months or longer, reflects growing concerns about a potential price decline, indicating that market participants foresee the possibility of a sharp downturn.
ETF holders and corporate treasuries collectively hold a considerable share of Bitcoin, with U.S.-listed spot Bitcoin ETFs and similar products attracting substantial inflows. U.S. funds alone have seen inflows of 1.26 million BTC, representing roughly 6% of Bitcoin's total circulating supply, while publicly listed firms account for about 1.14 million BTC, or 5.7% of the supply. Despite Bitcoin's recent fluctuations below $70,000, the options market displays a cautious sentiment, with puts trading at a significant premium to calls, underscoring a preference for downside protection over speculative bullish bets.
As Bitcoin bounced back slightly to around $67,500, the broader market sentiment remains cautious. The 25-delta risk reversal shows that 30-day puts are still trading at approximately a 7% volatility premium over calls, highlighting that smart money is focusing on protection rather than chasing price increases. Péquignot notes that if Bitcoin prices dip below $63,000, volatility could increase further, as dealers and market makers short gamma at that level may exacerbate downward movements when rebalancing their exposure.
Current market conditions are under pressure from various macroeconomic factors, including credit stress concerns and rising inflation indicators. Recent inflation readings have pushed back expectations for interest rate cuts, contributing to a risk-off sentiment across financial markets. This environment has led Bitcoin to slide back below $66,000, alongside other major cryptocurrencies and crypto-related stocks.
The implications of these movements suggest traders are anticipating Bitcoin to stabilize between $72,000 and $54,000 in the coming weeks, reflecting a cautious approach amid mounting macro risks. The significant hedging activity by ETF holders and corporate treasuries indicates that while they maintain a long-term outlook, they are also bracing for potential volatility in the short term. As these market dynamics continue to unfold, the focus will remain on how institutional investors navigate this uncertain landscape and what it means for the broader financial system.
The recent surge in the purchase of put options by institutional investors signifies a strategic response to market uncertainties. Jean-David Péquignot's insights highlight a critical aspect of market behavior: the expectation of potential price declines. This sentiment is particularly relevant given the current economic climate, where rising inflation and credit stress are prevalent. Investors are not only seeking to protect their positions but are also signaling a lack of confidence in sustained price increases in the near term.
The fact that ETF holders and corporate treasuries are engaging in such hedging strategies reflects their substantial stake in the Bitcoin market. These entities are not just passive investors; they are actively managing risk in an environment that is increasingly volatile. With ETF inflows reaching impressive levels, the stakes are high, and the financial implications of a price drop could be significant. The protective measures taken by these holders underscore a broader trend where institutional players are reassessing their risk profiles in light of macroeconomic pressures.
Moreover, the dynamics within the options market further illustrate this cautious sentiment. The trading of puts at a premium to calls indicates that traders are willing to pay more for downside protection than for speculative upside bets. This inversion is a classic sign of fear in the market, where the potential for loss outweighs the desire for profit. As Péquignot notes, while there may be short-term rebounds, the prevailing trend suggests that many market participants are preparing for more turbulence ahead.
In addition to the immediate financial implications, this trend of hedging among institutional investors may have longer-term effects on the Bitcoin ecosystem. As these entities continue to safeguard their investments, the overall liquidity in the market can be impacted. Increased demand for put options can lead to more volatility as market makers adjust their positions, potentially creating a feedback loop that amplifies price movements.
The heightened caution in the market is also reflected in traders’ forecasts. With Bitcoin being projected to remain range-bound between $72,000 and $54,000, the broader market is bracing for fluctuations within this corridor. Analysts and traders appear to be aligning their strategies with this expectation, focusing on managing risk rather than chasing after rapid gains. The range reflects both a ceiling of potential optimism and a floor of protective measures, painting a picture of a market caught in a state of uncertainty.
As Bitcoin trades within this delicate balance, macroeconomic indicators will play a crucial role in shaping future movements. The ongoing concerns surrounding inflation and credit conditions could influence not only Bitcoin's price but also the actions of institutional investors. If inflation continues to rise, or if credit conditions worsen, the risk-off sentiment may intensify, leading to further hedging activity.
In the grander scheme of the financial landscape, the actions of ETF holders and corporate treasuries may signal a pivotal moment for Bitcoin as an asset class. The increasing institutional adoption of Bitcoin has been a remarkable development over the past few years, but with this growth comes new challenges and responsibilities. The hedging behavior currently observed may serve as both a protective measure and a potential indicator of the asset's maturation in the financial markets.
As institutional players navigate the complexities of the crypto landscape, their strategies will likely evolve. The current hedging strategies employed by ETF holders and corporate treasuries may set a precedent for how risk is managed in this emerging asset class. These actions could lead to more structured and strategic approaches to investing in Bitcoin, as institutions seek to balance exposure with risk management more effectively.
In light of these developments, market observers will be keenly watching how Bitcoin reacts to these macroeconomic pressures and how institutional strategies adapt to changing market conditions. The interplay between hedging, market sentiment, and macroeconomic factors will continue to shape the narrative around Bitcoin as it seeks to establish itself not only as a digital currency but also as a recognized asset class in the broader financial system.
As the cryptocurrency market evolves, the importance of understanding risk management and hedging strategies will become increasingly vital for both institutional and retail investors alike. The current focus on downside protection reflects a broader acknowledgment of the inherent volatility in the crypto space, and how investors can position themselves to mitigate potential losses amid unpredictable price movements. This awareness marks a significant shift in how Bitcoin and other cryptocurrencies are approached, emphasizing the need for strategic planning and risk assessment in an ever-changing market landscape.