Bitcoin Traders Increase Downside Hedges After Reported $6 Billion Binance Hack
Bitcoin options traders moved aggressively to protect against potential price declines after a reported security breach at Binance, with institutional markets recording hundreds of millions of dollars in bearish derivatives positions. Trading activity on Paradigm and Deribit showed concentrated demand for put options, suggesting that some large investors were preparing for further downside in the near term.
The activity intensified after a hacker reportedly took more than $6 billion in crypto assets from Binance, the world's largest cryptocurrency exchange. Put options give buyers the right to sell Bitcoin at a predetermined price, allowing traders to hedge against falling prices without necessarily selling their existing holdings.
Bitcoin Put Options See Heavy Demand on Paradigm
According to Nicolas Quatravaux, Paradigm's head of EMEA, the first major trade occurred at 20:38 UTC, approximately 15 minutes after the first outflows from a Binance wallet and before news of the incident became public. Paradigm is an institutional liquidity network where large traders negotiate cryptocurrency derivatives transactions in block trades.
The initial transaction involved 250 lots of Bitcoin put options with a $78,000 strike price and an expiration date of October 31. Each lot represented one BTC, and the contracts carried approximately $20 million in notional value. Three minutes later, another block of 250 contracts with the same terms was traded, with the buyer paying about 35% more.
Altiorix Trades, which monitors market flows on X, highlighted the timing and structure of the transactions. The firm noted that the contracts were purchased when Bitcoin traded around $80,150, while the price had fallen to approximately the $80,000 strike area by that evening. It also pointed to simultaneous sales of $80,000 call options, which limited the trader's participation in further upside.
Paradigm Records $590 Million in Bitcoin Options Blocks
During the eight hours following the hack, Paradigm recorded approximately $590 million in notional Bitcoin options block trades. That figure was roughly half the total Bitcoin options block volume recorded on Deribit, the largest cryptocurrency options exchange, over the same period.
The trading was heavily skewed toward put options, which generally gain value when the underlying asset falls relative to the option's strike price, depending on the contract's terms and market conditions.
The busiest hour occurred before Binance issued a public statement about the incident. During that period, traders executed two blocks of 1,000 BTC each in put options with a $74,000 strike price and expirations in mid-November. Together, the transactions represented approximately $155 million in notional value.
Much of the demand focused on strike prices relatively close to Bitcoin's prevailing market price rather than contracts designed to profit from an extreme crash. The pattern suggested that traders were positioning for a potentially deeper short-term correction rather than exclusively pursuing protection against a remote, catastrophic decline.
Quatravaux said the buying was concentrated in put options with strike prices between $74,000 and $78,000, with expirations mainly scheduled for that week and mid-November.
Deribit Traders Also Position for Volatility
Deribit also experienced increased activity in Bitcoin put options following the incident. The largest reported position involved a multi-leg put strategy spanning November and December expirations, with approximately $190 million in notional value.
Other transactions included blocks of 500 BTC in November put options with a $64,000 strike price, alongside activity in March call options. Call options give buyers the right to purchase Bitcoin at a predetermined price and can provide exposure to potential price increases.
The combination of bearish puts and activity in calls indicated that not all participants were positioning exclusively for a decline. As Quatravaux observed, some traders were taking positions beyond defensive hedging.
The options activity provides a snapshot of how large traders responded to the reported Binance security incident. Although the concentration of put purchases pointed to heightened concern about near-term downside risk, derivatives transactions alone do not establish where Bitcoin's price will move next.
source: coindesk
Writer: Ethan Collins
Crypto Journalist
Ethan Collins reports on developments across the cryptocurrency and blockchain sector. His work covers market movements, protocol updates, regulatory changes, and emerging trends in digital assets.
He focuses on presenting complex topics in a clear and accessible manner for a broad readership.
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