The Market Is Heavily Short—What Comes Next?

Sentiment across all markets is extremely bearish, as reflected in the sharp corrections seen across both traditional and crypto markets. The S&P 500 is down 10% from its all-time high set less than a month ago, while Bitcoin has dropped 26% from its peak in late January. This downturn is largely driven by the uncertainty surrounding Trump's tariffs, which have heightened concerns over both political stability and macroeconomic conditions.

The graph below illustrates the five-day moving average of total US option put volumes over the past five years. Put options are contracts bought by investors who anticipate a decline in asset prices, allowing them to sell at a predetermined higher price to either lock in profits or hedge against losses. In short, put buyers are betting on markets falling.

Over the past month, we’ve seen a significant surge in put volume, now reaching a five-year high—eclipsing spikes seen during COVID, geopolitical conflicts, and recession fears. This is an unusual development, considering markets were hitting all-time highs just weeks ago. Today, however, we’re witnessing the highest level of put option activity in half a decade.

So, what does this mean for the markets? Well, with put volumes at extreme levels, the consensus expectation is that markets will continue to slide—sentiment is overwhelmingly fearful. However, when the majority of investors are positioned in one direction, the market often has a way of moving the other. As Buffett famously said, “Be fearful when others are greedy, and greedy when others are fearful.”

This certainly looks like one of those moments. Extreme fear, paired with record-high put activity, could set the stage for a move that catches most investors off guard.

If the put buyers turn out to be right, then take it as an opportunity to accumulate more Bitcoin at lower prices…

Stormrake Spotlight: Sonic (S) ($0.43)

Sonic is showing impressive strength despite broader market weakness. While Bitcoin is down 3% on the day, S is up 8%. More significant than the daily gain, however, is the fact that Sonic has bounced off a key must-hold order block and appears to have set a higher low on a larger time frame—an extremely bullish sign.

BTC/USD Key Levels and Price Action:

After showing some promising signs, Bitcoin has fallen back below the key $81.6K level—the bottom of its range. This move has flipped momentum in favour of the bears and put BTC’s structure at risk. Given the current price action, a break below $80K looks more likely than a reclaim of $85.2K in the short term.

BTC Total ETF Flows for 13 Mar: $ - 79.9 million

ETH/USD Key Levels and Price Action:

Ethereum remains trapped under the 21 & 55 EMAs, with every upside attempt being rejected—clear evidence that the bears are still in control. Until ETH can reclaim these moving averages, downside pressure is likely to persist. Expect a retest of the key $1,797 level in the near term.

ETH Total ETF Flows for 13 Mar: $ - 47.4 million

*All prices are denominated in USD unless stated otherwise*

Written by Alexandar Artis

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