After More Than $6.3 Billion Was Stolen from Binance in a Hack, Large Traders Increase Bitcoin Put Option Positions to Hedge Downside Risk

TechFlow reported on Oct. 30 that, according to CoinDesk, after hackers stole about $6.3 billion in crypto assets from Binance, large Bitcoin traders quickly increased their put option positions to hedge against short-term pullback risk. Binance said about $3 billion of the assets had been frozen, including $2.3 billion in USDT and USDC. Nicolas Quatravaux, head of Paradigm EMEA, said the first large trade occurred about 15 minutes after the first outflow from Binance wallets and before the news became public, when a buyer purchased 250 BTC put option contracts with a strike price of $78,000 and an Oct. 31 expiry, with a notional value of about $20 million.

Three minutes later, the premium paid by buyers for trades of the same size rose by about 35%. Within eight hours after the incident, the notional value of Paradigm's BTC options block trades was about $590 million, accounting for roughly half of the total BTC options block trade volume on Deribit during the same period, with put options predominating. This included two put option trades of 1,000 BTC each, expiring in mid-November with a strike price of $74,000, for a combined notional value of about $155 million. Buying was concentrated in the $74,000 to $78,000 range, indicating that traders were more focused on defensive hedges against near-term pullbacks rather than betting on an extreme crash. According to Velo data, BTC one-week option skew briefly rose to 18%, and skew across all tenors remained positive.

Source: TechFlow