Bitcoin : 490 million bets on a crash to 40,000 dollars, should we be alarmed?

The Bitcoin options market shows a clear signal: the 40,000 $ put has become the second largest bet before the February 27 expiration, with about 490 million dollars of notional. In other words, some traders are paying dearly for “catastrophe” insurance. Is this a prophecy? Not necessarily. It is often a hedging reflex when the market has just been shaken. Bitcoin currently drifts around 66,000–68,000 $, after a sharp decline from the October highs. In this setting, options look less like a vote on the future and more like a seatbelt fastened at the last moment.

A giant put on bitcoin is not a prediction, it is insurance

When a put option grows this much, you first need to look at who is buying it. Funds may be hedging a spot portfolio, miners may be securing their treasury, and desks may be structuring more complex strategies. The figure of 490 million impresses, but it mostly speaks of demand for protection, not a certainty that bitcoin will go to 40,000 $.

Another point that often misleads is the confusion between “notional” and “real risk.” Notional is a way to measure the size of a strike, not the maximum loss. An option can be bought to protect against an extreme scenario… that never happens. And that is precisely the point of insurance: to be glad to have it, and even more glad not to have to use it.

Finally, 40,000 $ for bitcoin is a psychological level. It tells a simple fear that is easy to understand and thus easy to trade. In down periods, markets like round numbers. They serve as landmarks, sometimes traps, often headlines.

The “max pain” and expiration: the mechanics that create noise

There is also talk of another magnet: around 75,000 $, there would be about 566 million dollars positioned, a level often described as “max pain.” This idea is intuitive: it is the zone where a maximum of options would expire worthless, which “hurts” the option buyers and rather benefits the sellers.

You have to be cautious with this notion. “Max pain” is not a law of physics. It is a reading of open interest, useful for understanding where interests concentrate, but insufficient alone to explain a price movement. The spot can completely ignore it if a news, a macro flow, or a leverage liquidation arrives at a bad moment.

What matters most is the approach of the expiration. The closer we get, the more hedging adjustments can accelerate movements, sometimes in a counterintuitive direction. A falling bitcoin can trigger hedges that amplify the drop. A rebounding market can force quick buybacks. On screen, it looks like an “emotional” decision. Behind the scenes, it is often plumbing.

The put/call ratio says: “we hedge,” not “we give up”

Despite the 40,000 $ put on bitcoin, the entire options market remains mostly call-oriented, with more call contracts than put contracts, and a put/call ratio around 0.72. This is the detail many forget: traders are not only betting on the drop, they are trying to keep exposure to the rebound while hedging.

This mix makes sense after a big correction. On one hand, you have investors who refuse to miss a turnaround. On the other, you have players who have learned the hard way that bitcoin can slip further than expected. Both coexist in the options order book, and this produces a risk map, not a single direction.

Should we be alarmed? Rather watch closely. A large put shows the market prices the extreme scenario more than before, especially in a context where some analysts are bringing back the idea of a “crypto winter” and much lower levels. But alarm does not mean panic. The right reading is: fear is priced higher, so uncertainty has risen a notch and sentiment has reached a critical level.