NEW YORK, Oct 13 (Reuters) – After the largest cryptocurrency selloff in history last Friday, investors in the options market are bracing for greater volatility and further declines in bitcoin and ether, aggressively positioning themselves in trades that offer protection against another potential free fall.
Market participants said on Friday that the crypto sector saw more than $19 billion in liquidations on leveraged positions as panic selling and low liquidity triggered sharp swings. The drop came after US President Donald Trump announced a 100% tariff on Chinese imports on Friday evening and threatened to control exports of critical software.
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Crypto analysts said it was the largest wipeout in a 24-hour period in market history, nine times larger than the February 2025 crash and 19 times larger than the March 2020 crash and the November 2022 FTX collapse.
Bitcoin fell to $104,782.88 during the October 10-11 period, down more than 14% from its high of $122,574.46 on Friday. It rose 0.6% to $115,718.13. The world’s largest cryptocurrency hit an all-time high above $126,000 on October 6.
Ether, the second-largest digital currency, fell 12.2% to a low of $3,436.29 on Friday. It last changed hands at $4,254, up 2.4% on the day.
Altcoins were hit even harder as HYPE (-54%), DOGE (-62%), and AVAX (-70%) all saw sharp declines before recovering to post more modest losses.
This weekend, however, Trump softened his rhetoric on China, noting that “everything will be fine” and that the United States did not want to “hurt” China. This helped in the recovery of crypto. China on Sunday accused the United States of being responsible for this escalation, but did not put in place further countermeasures.
“Last Friday, you saw volatility expand across the board, not just for short-term maturities, but also for long-term maturities. The sentiment around short-term volatility is that more and more people are worried about downtrend reversals,” said Sean Dawson, head of research at Derive.xyz in Canberra.
Data from Derive.xyz, a crypto options trading platform, showed significant “put” buying by bitcoin and ether traders, suggesting hedging against potential downside risks.
In the case of bitcoin, large put purchases grant the right to sell bitcoin at strike prices of $115,000 and $95,000 at expiration on October 31, according to Dawson. There was also a sharp reversal between buying a call and selling a call at the $125,000 strike price for the October 17 expiration, suggesting a short-term bearish view.
Calls in the options market reflect expectations of an increase in price.
For ether, Nick Forster, co-founder of Derive.xyz, said traders focused on the $4,000 strike price for the Oct. 31 expiration and the $3,600 strike price for the Oct. 17 expiration. He also noted substantial purchases of $2,600 puts due Dec. 26. These strikes, he said, are indicative of growing bearish sentiment through the end of the year.
Despite the collapse, Willy Woo, a prominent crypto analyst with over a million followers on
In contrast, Woo said he saw a sharp decline in ether flows as Solana continued its decline. He believes that capital in altcoins will likely turn into bitcoin rather than leaving the system.
Altcoins, also known as alternative coins, refer to cryptocurrencies other than bitcoin, which are often treated as high-risk, high-return investments. Some altcoins generate massive returns, but many fail or lose liquidity.
Bitcoin, on the other hand, is widely considered a premier crypto asset, widely held by institutions.
“The good news is that this (crash) has eliminated excess leverage and reset risk in the market, for now,” said Nic Puckrin, crypto analyst and co-founder of The Coin Bureau.
“However, Bitcoin now faces another uphill battle to surpass key resistance levels that will allow it to reach a significant new all-time high this year.”
Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Michelle Price; Editing by Alden Bentley
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