The crypto market has once again demonstrated its resilience and rapid emotional swings, as bullish sentiment surged back just one day after one of the year’s most severe liquidations of long positions. Despite a dramatic weekend selloff that wiped out over $1 billion in leveraged bets, traders wasted no time re-entering the market—this time through optimistic options positioning, particularly in Bitcoin and Solana.
Sharp Selloff Triggers Massive Liquidations
On August 4, approximately $1.1 billion in cryptocurrency positions were liquidated, marking one of the largest single-day cleanouts of leveraged longs in 2025, according to data from Coinglass. The sell-off began during the Asian trading session, with Bitcoin plunging as much as 17% and Ethereum briefly dropping more than 20%. These sharp declines triggered widespread margin calls across derivative platforms, especially affecting retail traders with high-leverage exposure.
Yevgeniy Feldman, head of institutional services at SwapGlobal—a firm offering prime brokerage and swap solutions to institutional investors—reported that nearly 50% of open derivative positions in the crypto market were liquidated during the downturn. "Traders got absolutely hammered on their long positions—it was brutal," Feldman said.
However, by Monday and Tuesday, signs of recovery began to emerge. Institutional players, particularly U.S.-based hedge funds and asset managers, returned aggressively—not through spot buying or futures, but via structured options trades.
Institutions Pivot to Call Spreads on Bitcoin and Solana
Rather than placing direct bullish bets, sophisticated market participants are increasingly turning to call spreads—a strategy involving buying a call option at a lower strike price while simultaneously selling one at a higher strike. This approach limits upside potential but significantly reduces premium costs, making it an attractive tool for managing risk amid volatility.
Feldman noted that major players are actively purchasing call spreads on both Bitcoin and Solana, with strike prices as high as $90,000 for Bitcoin later this year. These trades reflect a strong conviction that the current dip is temporary and that significant upside remains before year-end.
"This isn't blind optimism—it's strategic positioning based on observable demand imbalances," Feldman explained.
Coinbase Demand Signals Strong Support Zone
One of the key drivers behind renewed confidence is the surge in buying interest on Coinbase. Data compiled by SwapGlobal from exchange order books shows a pronounced imbalance between buy and sell orders—what traders refer to as the "buy-to-sell ratio."
At its lowest point on Monday, Bitcoin dipped to $49,212—the weakest level since February. Yet instead of triggering panic, this price level activated strong buying pressure. According to Feldman, there appears to be substantial demand waiting below $49,000.
“The imbalance suggests a deep pool of buyers stepping in at these levels,” he said. “This kind of structural support gives institutions confidence to build longer-term bullish positions.”
Retail Favors Puts, Institutions Lean Into Calls
While institutional investors are building call positions through over-the-counter (OTC) desks, retail behavior tells a different story. On offshore exchanges like Deribit, the put-to-call ratio has remained elevated over the past 24 hours—indicating stronger demand for put options, which profit from price declines.
Ravi Doshi, Market Head at FalconX, attributes this divergence to differing risk profiles and trading styles. “Retail traders often use options for short-term protection or speculation during volatility spikes,” Doshi said. “They’re reacting to fear.”
In contrast, U.S.-based institutions tend to hold large Bitcoin reserves and use OTC options for hedging or expressing macro views without disrupting markets.
“Even though front-month skew favors puts right now,” Doshi added, “the broader positioning still reflects expectations of a strong second half for Bitcoin.”
Major Options Expiries Reveal Bullish Price Targets
The growing optimism isn’t just anecdotal—it’s embedded in open interest data. As of Tuesday, the largest open contracts on listed options markets include:
- September $90,000 Bitcoin call
- December $100,000 Bitcoin call
- March 2026 $100,000 Bitcoin call
Together, these three options represent nearly $1 billion in notional value, signaling that major players are pricing in substantial gains over the next 12 to 18 months.
Bitcoin recovered strongly on Tuesday, rising about 4.5% to around $56,850 on New York trading desks. Ethereum also rebounded, regaining most of its lost ground from the weekend selloff.
Political Catalysts Fuel Year-End Optimism
A significant factor contributing to the positive outlook is the evolving political landscape in the United States. With increasing speculation that Donald Trump could return to the White House in 2025—and his recent emergence as a vocal supporter of cryptocurrencies—many investors view regulatory conditions as potentially favorable.
Trump’s pro-crypto stance includes promises to appoint blockchain-friendly regulators and support digital asset innovation. This shift has helped ease concerns about future crackdowns and boosted investor confidence in the sector’s long-term trajectory.
FAQ: Understanding the Current Crypto Market Sentiment
Q: Why did so many positions get liquidated on August 4?
A: A sharp 17% drop in Bitcoin triggered margin calls on leveraged long positions across derivatives platforms. With many traders using high leverage, even moderate price moves led to cascading liquidations totaling $1.1 billion.
Q: What’s the difference between retail and institutional options strategies?
A: Retail traders often buy puts for short-term protection during volatility. Institutions typically use structured products like call spreads to express bullish views with controlled risk and lower cost.
Q: Why are $90K and $100K Bitcoin calls significant?
A: Large open interest at these strike prices indicates strong conviction among professional traders that Bitcoin will reach or exceed these levels by late 2025 or early 2026.
Q: How does Coinbase order book data influence sentiment?
A: Persistent buy-side pressure below $49,000 suggests strong foundational demand. This acts as a psychological and technical support zone, encouraging institutions to take longer-term bullish positions.
Q: Are options a reliable indicator of future price movements?
A: While not predictive per se, large concentrations of open interest reflect where major players expect prices to go. When combined with order flow and macro trends, options data offers valuable insight into market psychology.
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Conclusion: Volatility Breeds Opportunity
The events of early August underscore a defining trait of the cryptocurrency market: extreme volatility followed by equally rapid recovery. While retail traders were caught off guard by the selloff, institutions used the dip as an opportunity to reposition via options.
With major players betting on Bitcoin reaching $90,000–$100,000 by year-end and political tailwinds emerging, the stage may be set for another leg up in the ongoing bull cycle. Whether driven by technical support, derivatives positioning, or macro developments, bullish momentum is clearly regaining strength—one options contract at a time.
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