Panic sentiment surges, "hedging costs" reach new highs! VanEck: Bitcoin may be approaching a reversal point

Asset management firm VanEck’s research indicates that the Bitcoin market is currently shrouded in extreme anxiety. Even as hedging costs reach record highs, traders are willing to pay any price to seek downside protection, building strong defensive barriers. However, historical experience shows that “extreme fear” often signals an impending market reversal.
Leverage cooling, volatility converging, but hedging sentiment at extreme levels
In a report, VanEck senior analyst noted that compared to the previous statistical cycle, Bitcoin’s 30-day moving average price has fallen 19%, while “Realized Volatility” has sharply contracted from around 80 to just above 50.
At the same time, leverage activity in the futures market has also cooled, and the “Futures Funding Rates,” which measure market speculation heat, have dropped from 4.1% to 2.7%.
However, the true “fear indicator” is hidden in the options market. VanEck states that the “Put/Call Ratio” of open interest in options has averaged 0.77 and once rose to 0.84, reaching the highest level since June 2021. At that time, China was cracking down on the Bitcoin mining industry, causing intense market turbulence.
The report mentions that over the past 30 days, traders have invested a total of $685 million in Bitcoin put options (bearish options to hedge against falling prices), while call options (bullish options betting on rising prices) premiums have decreased by 12%, down to about $562 million.
More panic than during Terra collapse!
More critically, compared to spot trading volume, “Put Premiums” have risen to about 4 basis points, setting a historical high tracked by VanEck’s own data.
VanEck points out, “This level is roughly three times higher than during mid-2022, when the market experienced the Terra/Luna collapse and Ethereum staking liquidity crisis.”

Crisis or turning point?
Despite the gloomy data, VanEck sees a glimmer of hope from historical patterns. The report analyzes that extreme panic does not necessarily mean further market collapse; instead, it could be an important turning point.
VanEck’s research found that over the past six years, whenever similar quarterly pessimistic skew data appeared in the options market, Bitcoin’s subsequent performance was often strong: an average increase of about 13% over 90 days, and an even higher average gain of 133% over 360 days.