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Whales Positioning for Bearish Options on SOL
Market sentiment heavily bearish with 80% of trades focused on put options
SOL price plummets, market sentiment turns bearish
March 1st unlocking event for SOL could intensify selling pressure
Whales Positioning for Bearish Options on SOL
As the price of Solana (SOL) continues to decline, the trading volume of SOL options on the derivatives trading platform Deribit has surged, with large investors positioning for further price decline.
According to CoinDesk, block trades for SOL options on Deribit totaled $32.39 million last week, accounting for nearly 25% of the exchange’s total options trading volume of $130.74 million. According to data from Amberdata, this is the “second-highest” proportion of block trades in history, with the remaining trading volume coming from “screen trades” conducted through the exchange’s order book.
Block trades refer to large-scale options trades negotiated privately and registered on the exchange, usually executed by whale investors through over-the-counter (OTC) trading to minimize impact on market prices.
Market sentiment heavily bearish with 80% of trades focused on put options
Options are derivative financial instruments that allow holders to buy or sell assets at a predetermined price before a specified date. Among them, call options allow the buyer to buy at a fixed price, while put options allow the holder to sell at a predetermined price.
Greg Magadini, derivatives director at Amberdata, pointed out that “approximately 80% of the block trading volume for SOL is concentrated in put options, much higher than the proportions for BTC (40%) and ETH (37.5%) during the same period.” This indicates that investors are actively hedging against the potential further decline of SOL.
SOL price plummets, market sentiment turns bearish
Over the past five weeks, the price of SOL has dropped by 46% to $160, leading to a pessimistic market sentiment. The Solana blockchain attracted a large number of traders during the memecoin craze, especially after the launch of the TRUMP token on January 17th, which reached its peak trading volume. However, the daily trading volume of Solana and DEX transactions subsequently decreased significantly, further weakening market confidence in SOL.
A report from blockchain data analysis company Artemis shows a significant decline in transaction activity on the Solana network, which has formed a vicious cycle with the decline in SOL price.
March 1st unlocking event for SOL could intensify selling pressure
Lin Chen, Head of Deribit’s Asia-Pacific business, warned that a significant token unlocking event on March 1st could further impact the price of SOL.
“Solana will unlock 11.2 million SOL (worth approximately $2.07 billion), accounting for 2.29% of the total supply, on March 1st. These tokens mainly come from the liquidation of FTX and sales by the Solana Foundation.”
Lin Chen pointed out that the scale of this unlocking event is close to 59% of the daily spot trading volume of SOL, which could lead to significant market volatility in the short term. As a result, investors are heavily buying put options to hedge against risks and profit from volatility trading (long Volatility).
In summary, the recent decline in SOL price, weakened blockchain activity, and the upcoming large-scale unlocking event have led to a generally pessimistic outlook on its future performance in the market.
