Bitcoin options are showing unprecedented fear as traders brace for a deeper selloff, marking the highest level of anxiety in a year. According to Cointelegraph, Bitcoin (BTC) recently experienced a sharp 10% correction, testing the $81,000 level for the first time in over two months. This downturn follows significant outflows from spot Bitcoin exchange-traded funds (ETFs), particularly alongside a 13% drop in gold prices from their all-time high. The volatility has led traders to question the strength of the crucial $80,000 psychological support level.

US-listed spot Bitcoin ETFs have seen $2.7 billion in net outflows since January 16, representing 2.3% of total assets under management. Concerns are growing that institutional demand for Bitcoin may have stalled, while gold’s recent 18% gain over three months could be overshadowing Bitcoin’s traditional appeal as a safe haven. Regardless of the exact reasons for the decline, the perception of risk in the market has clearly risen.

Adding to investor anxiety is the potential threat of quantum computing on the cryptographic methods that secure blockchains. Coinbase has formed an independent advisory board to assess these risks, with plans for public research by early 2027, separate from its core management. The debate intensified when Jefferies removed Bitcoin from its flagship portfolio, citing long-term security concerns. However, Adam Back, a cryptographer and Blockstream co-founder, has predicted that material quantum risks to Bitcoin over the next decade are unlikely, arguing that the technology is still in its infancy.

Bitcoin options are now reflecting this bearish sentiment, with the BTC options delta skew climbing to 17% on Friday, the highest in over a year. In neutral markets, put options typically trade at a premium of 6% or less compared to call options. Current figures indicate extreme fear, which often leads to volatile price movements as market makers hedge against potential downturns.

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Approximately $860 million in leveraged long BTC futures positions were liquidated between Thursday and Friday, catching many traders off guard. However, blaming the crash solely on leverage may be misleading; aggregate BTC futures open interest has fallen to $46 billion from $58 billion three months ago. A decline in interest in leveraged futures isn't always a bearish signal. The market could be healthier now that excessive leverage has been cleared out.

To gauge risk appetite, analysts often monitor stablecoin demand in China. When investors rush to exit the crypto market, this indicator typically drops below parity. Currently, stablecoins are trading at a 0.2% discount, suggesting moderate outflows, a slight improvement from last week’s 1% discount. Overall, Bitcoin derivatives reflect a cautious market mood following a 13% price drop in the last two weeks.

Whether Bitcoin can reclaim $87,000 and regain bullish momentum depends on investors understanding that no asset is immune to corrections. Macro-economic and socio-political concerns are driving a sudden demand for cash and short-term US Treasuries, complicating the outlook for Bitcoin.

Investors must navigate these turbulent waters carefully. The market's current state suggests that caution is paramount. As Bitcoin faces these challenges, traders should remain vigilant and informed, as the landscape continues to shift rapidly.