Institutional Investors Intensify Bearish Options Trading
Institutional investors and major stakeholders, commonly known as “whales,” have amplified their bearish positions on Solana (SOL) options amid an ongoing price decline and an impending token unlock. Data from Deribit, the premier crypto options exchange worldwide, reveals a significant rise in block trades involving SOL put options, signaling increasing anxiety regarding possible further downside risks.
According to Amberdata, block trades for SOL last week constituted nearly 25% of the total Solana options activity on Deribit, totaling approximately $32.39 million in notional value out of a combined $130.74 million in options trades. This reflects the second-highest share of block trades in relation to overall options activity ever recorded.
Block trades represent substantial privately negotiated transactions conducted outside the standard order book and subsequently recorded on the exchange. They are frequently utilized by institutional investors to manage large positions with minimal impact on the market. On Deribit, where over 85% of global crypto options trading occurs, each contract stands for 1 SOL.
A striking feature of last week’s surge in options activity was the predominance of put options, which offer traders downside protection. “Almost 80% of the block-trade volume was focused on put contracts. In contrast, only 40% puts were noted for BTC and 37.5% puts for ETH during the same period,” remarked Greg Magadini, director of derivatives at Amberdata.
This heightened interest in put options arises as SOL’s price has plummeted by 46% in just over five weeks, currently lingering around $160. A key element impacting sentiment is the expected multi-billion dollar token unlock, which could introduce considerable selling pressure in the market.
Decreasing On-Chain Activity and Market Ambiguity
Compounding the bearish perspective, Solana’s on-chain activity has experienced a significant slowdown since January. The network had transformed into a hotspot for memecoin traders, with activity peaking around the debut of the TRUMP token on January 17, just three days before Donald Trump’s inauguration as the U.S. President. Since that point, transaction volumes on Solana’s decentralized exchanges have sharply declined, undermining the bullish argument for SOL.
Data from Artemis corroborates that the daily transactions on the Solana blockchain have consistently dropped, diminishing network utilization and investor trust. This reduction in user engagement, coupled with upcoming token unlocks, has prompted traders to aggressively hedge their positions via put options.
In the meantime, market maker Wintermute has also engaged in significant activities concerning SOL, removing a considerable quantity of the token from Binance in the last four hours. This may indicate preparations for strategic trading maneuvers or possible liquidity adjustments as market scenarios remain unpredictable.
As Solana weathers this turbulent phase, investors are vigilantly observing whether institutional positioning in options trading indicates a more profound correction.
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