NEW YORK – Bitcoin is in free fall – and traders are positioning for more pain.
The world’s largest cryptocurrency plunged below US$91,500 on Nov 17, deepening a sell-off that’s erased all of its gains for 2025. In the options market, traders are making increasingly bearish wagers, on the conviction that the slide is far from over as deep-pocketed buyers beat a retreat.
The shift in sentiment has been swift and sharp. Demand for downside protection – particularly at the US$90,000, US$85,000 and US$80,000 levels – has surged. Protective options expiring later this month are seeing especially heavy activity, according to data from Coinbase-owned Deribit.
After riding Bitcoin to the highs just weeks ago, traders have snapped up more than US$740 million (S$964 million) worth of contracts betting on continued declines expiring in late November – far outpacing interest in bullish positions.
“The absence of conviction-based spot demand has become increasingly apparent as buyers who accumulated positions over the last six months now find themselves significantly underwater,” said Chris Newhouse, director of research at Ergonia, a firm specialising in decentralized finance.
The pain has been concentrated in companies known as digital-asset treasuries – firms that stockpiled large amounts of cryptocurrencies earlier in 2025 in an effort to become crypto-hoarding bets in the stock market. While Michael Saylor’s Strategy just bought another US$835 million worth of Bitcoin, some of his corporate peers are facing growing pressure to sell assets to protect their balance sheets.
That selling has created a psychological overhang: A market crowded with investors who are too deep in the red to buy more, but not yet ready to cut their losses.
A sentiment index compiled by data-analytics platform CoinMarketCap – tracking price momentum, volatility, derivatives, and more – indicates crypto participants are mired in a state of “extreme fear.”
Larger economic forces are weighing on sentiment, too. Traders are eyeing earnings from AI chip giant Nvidia on Nov 19 – a bellwether for tech and speculative risk – as well as shifting expectations for a possible interest-rate cut from the Federal Reserve in December. The S&P 500 fell more than 1 per cent on Nov 17, hitting sentiment for risk assets of all stripes.
“I think the Fed and AI bubble talk are two major headwinds for crypto and risk assets heading into the end of the year,” said Adam McCarthy, a research analyst at Kaiko. “The AI risk is likely compounding and affecting risk sentiment in crypto, adding that to the chatter from FOMC officials, you’re looking at a sustained downtrend for Bitcoin.”
Ethereum’s token, Ether, is proving especially vulnerable. The world’s second-largest cryptocurrency slumped to US$2,975, bringing its decline to 24 per cent since early October.
“Ether is very vulnerable to this theme as the biggest digital asset treasury firms are currently underwater on their positions,” said Greg Magadini, director of derivatives at Amberdata.
The broader market has been reeling since a sharp liquidation wave in early October erased about US$19 billion in digital assets. Open interest in crypto futures contracts has dropped, particularly in smaller tokens like Solana, where positioning has fallen by more than half, according to Coinglass data.
“That riskoff tone spills into crypto markets, where sentiment remains fragile – the latest drawdown reflects broader macro jitters rather than structural flaws,” said Thomas Perfumo, global economist at crypto exchange Kraken. BLOOMBERG
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