Eight major warning signs plummeted, and 552 million safe-haven funds bottomed out

According to WooFunai, VanEck detected 8 signs indicating a price drop in the Bitcoin market. At the same time, traders invested 552 million US dollars to buy bearish options to prevent a further sharp decline. This extreme risk aversion contrasts sharply with potential signs of bottoming out.

Judging from the historical cycle, the current decline has continued for 10 months. This period is gradually approaching the average cycle from the beginning to the bottom of the previous major bear markets. Excluding the unusually short fluctuation in 2011, the past three major downturns took an average of 12.7 months, which means that October or November is most likely the time window for entering the fund-raising phase.

However, historical data did not give an optimistic short-term return forecast: in 90 days when 8 to 12 stop-loss indicators were triggered, Bitcoin's average increase was only 12.8%, below the overall average of 15.2%; over the 180-day period, the average increase was 32%, which is also lower than the benchmark level of 36.3%. The performance of these indicators is only slightly superior to the benchmark when extended to a one-year time dimension, but VanEck emphasized that this conclusion is based on data from only 115 observations, and there are a large number of overlapping cases, so the reference value is limited. Historical records suggest that Bitcoin may be deep in the bottoming phase, but they don't provide an exact timeline for the price reversal.

Data from the options market revealed a more complex microstructure. According to data compiled by WooFunai, the 30-day actual volatility rate has dropped to 27.2% annualized, which is far below Bitcoin's long-term average of nearly 80% because the price is compressed within a narrow range of $62,265 to $66,509.

Despite low volatility, the premium used to buy Bitcoin put options surged 42% over the past month to reach $551.8 million, while the call option premium fell 10% to $237.6 million. This brought the bearish to bullish option premium ratio of 2.30, higher than the 99% observed value since 2021, and more than three times its historical average of 0.71.

This imbalance shows that investors are willing to pay heavily to buy downside protection. It is worth noting that the implied volatility of 1-month call options fell to 32.7%, close to the lowest point since 2021, while the implied volatility of put options remained around 40%, which suggests that the expected trend in the market is moderate but the downside risk premium is high. Open positions are still bullish, possibly due to the limited number of retention contracts due to the expiration of old short put options and the high cost of new purchase protection.

In terms of position structure and capital flow, Bitcoin was tenaciously supported above the June low of $60,000. Despite continued distribution from long-term holders, the number of bitcoins held for more than 1 year decreased by about 356,000 in the past 30 days, and their share of holdings fell below 60%, but the continued inflow of ETF funds provided key demand support for the market.

This acceptance of institutional capital offsets the sluggish activity of the spot market and selling pressure from long-term holders. The market appears to be trying to establish a price bottom line, but the high safe-haven costs in the options market suggest that traders are still skeptical about the stability of this bottom line and are unwilling to be blindly optimistic without further testing. This is a typical characteristic of institutional funding becoming the only stable anchor after large-scale disbursements from long-term holders.