As Bitcoin Spot Price Falls Below Average IBIT Options Strike Price, Institutional Investors Seek Downside Protection

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A substantial shift in sentiment is unfolding among traditional finance players, diverging from the bullish exuberance observed earlier in the year. As of May 13, a noteworthy development has occurred: the average strike price on IBIT options has dipped below the present Bitcoin (CRYPTO:BTC) spot price. This shift is a direct result of institutional investors’ rising interest in securing protection against potential declines in the cryptocurrency market.

A substantial shift in sentiment is unfolding among traditional finance players, diverging from the bullish exuberance observed earlier in the year. As of May 13, a noteworthy development has occurred: the average strike price on IBIT options has dipped below the present Bitcoin (CRYPTO:BTC) spot price. This shift is a direct result of institutional investors’ rising interest in securing protection against potential declines in the cryptocurrency market.

Earlier this year, institutions were actively setting up bullish payoffs, largely focused on IBIT options with strike prices above the prevailing BTC price. This strategy was aimed at maximizing gains if Bitcoin continued its bullish trajectory. However, recent adjustments to investment strategies have led to a reversal of this trend.

Now, institutions are setting up bearish payoffs, primarily through IBIT options with strike prices below the current BTC price. This adjustment is designed to mitigate losses if Bitcoin experiences a downturn. Despite this defensive positioning, the institutions’ total option delta has surged to nearly $10 billion, indicating that a substantial portion of market exposure remains in play.