Bitcoin Traders Load $40K Puts Ahead of $7.3B Expiry

• $40K put is the 2nd-largest strike, about $490M notional, signaling strong downside hedging.
• Feb. 27 expiry nears with about $7.3B in options; $75K max pain holds about $566M in notional value.
• Calls top puts 63,547 to 45,914, but low-strike put demand remains strong.

Bitcoin traders are stacking downside protection ahead of next week’s February 27 options expiry, with open interest growing at lower strikes after a drawdown from last year’s highs. In particular, the $40,000 put option has grown into the second-largest strike by open interest, signaling heavy demand for insurance-style positioning as the market heads into month-end settlement.

Put options are derivatives that give holders the right, but not the obligation, to sell Bitcoin at a predetermined price before expiry. Therefore, they can pay out if BTC trades below the strike level, and they are often used to hedge against price declines.

$490M Notional Tied to $40,000 Strike as Tail-Risk Hedge Grows

The $40,000 put now is roughly equivalent to $490 million in notional value at that strike. As a result, the size of the position stands out in the current expiry cycle, showing willingness for deeper tail-risk hedges after Bitcoin’s selloff.

BTC has declined by up to 50% from its October highs and is now trading around $66,000, reshaping positioning across the board. Meanwhile, data from Deribit, the Dubai-based exchange owned by Coinbase, shows that roughly $7.3 billion in Bitcoin options notional value is set to expire at the end of the month.

Max Pain Sits at $75,000 With $566M at That Strike

Alongside the built-in lower-strike puts, positioning is also concentrated around $75,000. About $566 million in notional value sits at the $75,000 strike, which also represents the max pain level.

Max pain equates to the price at which the greatest number of options expire worthless, minimizing payouts to buyers. With the spot price trading below $75,000, a move higher into expiry could reduce losses for call sellers.

Although calls outweigh puts overall, with 63,547 call contracts versus 45,914 puts, the market is not positioned in a single direction. The put-to-call ratio of 0.72 shows the positive bets still dominate in aggregate, but the major put open interest at lower strikes underscores demand for downside insurance into expiry.

$40,000 Target Cited as Bear Market Deepens

On Monday, Zacks Investment Research’s chief strategist, John Blank, said Bitcoin’s price could decline to $40,000 if the rout continues. Blank told CNBC he derived the $40,000 level from the pattern of recent highs and lows, and he added that Bitcoin could reach that mark within the next six to eight months if the selloff persists.

Bitcoin traded below $75,000, its lowest level since President Donald Trump won the presidential election in November 2024. CoinMarketCap listed Bitcoin at $66,873.58 at press time, down by 1.86% over 24 hours, with $33,027,193,993 in daily volume and a market cap of $1,336,923,797,723. 

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