Bitcoin has broken below the February low and bounced from the June low.

Here's what Bitcoin options data reveals about positioning, volatility expectations, and market sentiment beneath the surface.

Selloff Triggers a Temporary Volatility Spike

ATM IV jumped as BTC broke below the February low, with 1W IV briefly reaching 65%. The spike quickly faded, with front end volatility back near 40%.

Markets still view the selloff as a contained move.

Protection Demand Spikes Then Fades

1W skew surged from 12% to 28% as BTC broke below the February low, reflecting a rush for downside protection. The move quickly faded, with front end skew now back near 12%.

Volatility Risk Premium Narrows

1M realized volatility rebounded from 27% to 41% following the selloff, while 1M IV retraced toward 41%. The spread has largely disappeared, with RV now almost matching what options markets had been pricing.

Protection Demand Dominates Flow

7 day taker flow remains defensive, with put buying accounting for 30% of premium traded versus 20% for calls.

The last 24 hours show a similar pattern, suggesting demand for downside protection remains elevated.

Short Gamma Sits Above Spot

The largest negative gamma cluster now sits at 65K, just above current spot near 63.8K. With several other short gamma strikes concentrated up to 70K, dealer hedging could amplify upward moves if BTC reclaims this area.

Wrap Up

Volatility spiked, then normalized.

Protection demand surged, then faded.

The volatility risk premium has largely closed.

Flow remains defensive, while short gamma sits above spot.

The market has absorbed the initial shock, but options positioning remains cautious.