Here’s how big bitcoin traders responded after the Binance hack hit
A day ago, we noted how bitcoin $BTC$77,330.58 investors were buying insurance against potential price drops in the largest cryptocurrency. That bias strengthened after a hacker walked away with more than $6 billion in crypto assets from Binance, the largest crypto exchange.
The insurance in question is a put option, which gives the buyer the right to sell bitcoin at a predetermined price. The option pays off if the $BTC price falls below the agreed sale price, or strike.
The scramble to buy these hedges in privately negotiated deals took off on Paradigm, a liquidity network where large traders negotiate bets in block trades.
The first big trade hit at 20:38 UTC, about 15 minutes after the first outflows from Binance’s wallet and before the news was public, Nicolas Quatravaux, head of EMEA at Paradigm, the leading institutional liquidity network in crypto derivatives, told CoinDesk.
The trade involved buying 250 lots (each representing one $BTC) of $78,000 puts expiring Oct. 31, worth about $20 million in notional terms. Notional value is the dollar value of the bitcoin the contracts cover. Three minutes later, another 250 clip of the same put traded, and the buyer paid about 35% more.
Altiorix Trades, which tracks market flows on X, said purchases looked especially telling. “The contracts were purchased with $BTC around $80.15K, and by the night price was trading right at that strike. Selling the 80K calls at the same time capped any participation in further upside,” it said.
In the eight hours since the hack, Paradigm traded around $590 million in notional $BTC options blocks. That is about half of the total $BTC options block volume on Deribit, the largest crypto options exchange, over the same period.
The flow was lopsidedly bearish, with most of the amount in puts. The busiest hour came before Binance had said anything and included two 1,000 $BTC blocks of mid-November $74,000 puts, totaling about $155 million in notional value.
Most of the buying occurred in puts just below, but still near, the spot price, not at far lower strikes. That suggests this is not deep-tail hedging, or lottery-ticket bets on a potential crash, but rather conviction hedging against a deeper near-term pullback.
“The buying sits close to the current price, at strikes of $74,000 to $78,000, mostly expiring this week and in mid-November,” Quatravaux noted.
Deribit, too, saw increased activity in put options. The biggest bet involved a multi-leg put strategy across November and December expiries worth around $190 million. Another trade involved 500 $BTC blocks in November $64,000 puts and some flow in March calls. “So not everyone was playing defense,” Quatravaux noted.
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