Bitcoin’s Descent: Panic Fades, But Fear Lingers

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Lo! The bearish sentiments, like a shadow, continue to loom over the Bitcoin market, where the premier cryptocurrency, in its relentless pursuit of a fifth consecutive monthly loss, now finds itself ensnared beneath the $70,000 mark. Behold, the market bulls, valiant yet futile, strive to breach the resistance zone, their efforts akin to pushing a boulder uphill, only to watch it roll back down with cruel indifference.

Amidst this tumultuous dance of price, the Bitcoin options market reveals a curious truth: traders, those shrewd gamblers of the financial realm, now whisper of diminished volatility, yet still clasp their wallets as if fearing a thief in the night. A paradox, indeed, where hope flickers but does not flame.

Bitcoin Volatility Expectations Drop, Market Panic Fades

On the fateful day of February 20, the venerable Glassnode, that arbiter of market wisdom, shared its weekly oracular insights. The analysts, with eyes sharp as a hawk’s, noted a marked decline in volatility expectations, a balm for the overwrought hearts of bearish souls. The ATM implied volatility, that barometer of market dread, has slumped to 48%, a testament to the waning belief in an imminent crash. One might say the market now breathes easier, though its sighs are laced with caution.

Behold, the DVOL, that measure of collective anxiety, has receded by 10 points, a sign that the fevered hedging of late January/early February has begun to abate. And lo! The short-term volatility risk premium, once a dire (-45), has turned positive, as if the market itself has taken a deep breath and declared, “Perhaps not all is lost.”

Together, these signs suggest that the panic, that specter which once haunted the market, is now being reset, its claws dulled by the passage of time. Yet, the expectation of monumental, volatile moves has waned, like a sunset fading into twilight.

Bitcoin Traders Remain Alert To Downside

Despite this cooling of volatility, other metrics reveal the traders’ enduring vigilance. The Put skew, that measure of desperation for downside protection, remains elevated, though no longer at its peak. The one-week 25-delta skew, once a mere 7 volatility points, now stands at 14, a testament to the lingering fear that the correction, though softened, is not yet concluded.

The taker flow data, that mirror of market action, tells a tale of caution. Puts, those instruments of protection, dominated last week’s options activity, with outright put buying accounting for a third of total flow. It is as if the market, having tasted the bitter wine of loss, now seeks to guard against further sorrow.

In conclusion, the options market, that oracle of futures, now speaks of a more measured outlook, where the immediate turmoil has ebbed, yet the specter of downside remains. At press time, Bitcoin trades at $67,628, a modest gain in the last 24 hours, as if the market itself hesitates to commit to a bold leap.

And lo, the dealers, those enigmatic figures, are short gamma across a wide price range, a positioning that could amplify selling pressure should Bitcoin falter. Yet, a concentration of gamma around $75,000 hints at a potential rebound, a flicker of hope in the gloom.

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2026-02-21 17:30