From "Mega Lotto Prediction" to "Insurance Purchase": The Current Retail Main Force Divergence in the Crypto Market

Since the sharp market correction in mid-October, the cryptocurrency market seems to have fallen into a strange equilibrium. For many retail investors, it is no longer a one-sided “lottery prediction” style trend, but rather a need to interpret the true intentions of the main players from micro-market signals. Based on multi-dimensional data cross-validation, a clear fact is emerging: retail investors and speculative capital are holding steady on the exchange, while institutional main forces are accelerating withdrawals from the spot market and simultaneously spending huge sums on derivatives to build risk defenses.

Weak Signals in Order Book and Positioning: A Fragile Balance Under Liquidity Deterioration

To accurately assess the current liquidity situation, the order depth difference is the most direct indicator. Taking Binance BTC/USDT perpetual contracts as an example, a noticeable trend since October cannot be ignored: the market’s capacity to absorb orders is continuously weakening.

The buy order book depth, which previously generally stayed above the $200 million level, has fallen to the $100-200 million range. The sell side depth has also not escaped, remaining below $200 million. More notably, the gap between long and short order depths has become extremely balanced—recently, the difference has hovered around $10 million, which is rare in the past. This data reveals a core signal: although the long and short forces seem evenly matched, the entire market has fallen into a quagmire of continuous liquidity decline.

Position data further confirms this judgment. The overall holdings of altcoins (excluding BTC and ETH) have not rebounded with the price lows but have continued to shrink. In comparison, the market experienced a deep adjustment in April, but after the bottoming out, holdings rebounded sharply, even starting to recover before the price hit its lowest point. Today’s quiet scene forms a stark contrast.

The trading volume in altcoin futures markets is also shrinking, with no sign of the expected “bottom-fishing surge” that would drive trading volume to spike. These indicators collectively point to a conclusion: the altcoin market has entered an awkward state of “no one cares,” with retail and speculative funds still on the sidelines but stuck in a wait-and-see stalemate.

The Truth of the Options Market: Retail “Lottery Predictions” vs. Institutional “High-Price Hedging”

Options market data can better reveal the true thoughts of market participants. According to statistics, the open interest ratio of BTC options and futures has soared this year, even surpassing 100% at its peak, and remains around 90%. This indicates that the BTC market has shifted from a futures-dominated era to a new pattern dominated by options contracts. In contrast, ETH options open interest has fallen to around 30%, suggesting that institutional focus is now highly concentrated on BTC.

This shift hides two important implications. First, the discourse power in the BTC market has been thoroughly seized by institutions and hedge funds, while ETH and other competing coins are no longer the trading stage for these elite players. Second, when predicting BTC’s trend, options market data has become a more valuable reference than futures—even if prices fall, options open interest remains firmly high.

Further analyzing the market structure, the data presents an interesting contrast. Using recent key expiration dates as reference, the nominal open interest of call options is about 2.5 times that of put options, but the actual capital invested is the opposite—total value of puts is about $500 million, while calls are only about $71 million. What does this inverted structure mean? Call options have become extremely cheap (average price around $370), while puts are prohibitively expensive (average price around $6,800).

Looking at strike price distribution, most call options are concentrated above $100,000, making their actual exercise probability very low. Therefore, although the number of call options is large, they are essentially “lottery-like” speculative bets—buyers betting on a low-probability, massive surge at very low cost. Conversely, a large number of puts have strike prices below $85,000, with the total market value of puts (~$1.124 billion) far exceeding that of calls (~$373 million).

Summarizing this contrast: although bullish sentiment is more prevalent and numerous, about 75% of the capital is betting on a decline or building downside hedges. For institutions buying large amounts of puts, most are using derivatives to hedge against spot declines. Despite being defensive in nature, the exorbitant cost of hedging leads them to insist on buying, reflecting a pessimistic outlook on the market’s future.

Meanwhile, the $100,000 strike is becoming the “big pain point” in this month’s options market (the price point with the most conflicting interests). For market makers (option sellers), as long as the price stays near $100,000, they are the biggest winners. But for those institutions heavily invested in puts, they are eager for the price not to break through this level.

Reverse Flows of Stablecoins: An Intuitive Reflection of Retail Waiting and Institutional Retreat

Data on stablecoin flows on exchanges strongly supports the above analysis. According to CryptoQuant, USDT reserves on exchanges have been on an upward trajectory throughout the year, recently maintaining a record high of about $60 billion. As the main pricing reference for non-compliant exchanges, the continuous accumulation of USDT reserves indicates that a large amount of speculative capital is still holding positions or waiting for a bottom. Coupled with the declining trend in holdings, it suggests these capitals are in a “wait-and-see” mode, ready to act.

USDC shows a completely different trajectory. Since the end of last year, large amounts of USDC have been withdrawn from exchanges, with reserves dropping from $15 billion to around $9 billion—a 40% decline. As a compliant stablecoin leader, USDC’s main users are US institutional investors and compliant funds, representing the “mainstream forces” in the market. They are now accelerating their exit.

The opposite flows of USDT and USDC paint a true picture of the market: retail and speculative capital are holding steady on the sidelines, waiting for a bottom; while compliant institutional forces are quietly retreating. This scene is remarkably consistent with the conclusions from the options market data.

Bottom Play or Risk Hedging? The Consistent Conclusion from Multi-Dimensional Data

Integrating data from order book depth, options holdings, and capital flows, a clear picture emerges: since the sharp decline in mid-October, the market has not truly recovered. Instead, what we see is a liquidity-starved environment with a severe divergence between retail and main forces.

Retail and speculative capital hold chips on the sidelines, attempting to profit from “lottery-like” call options with low probability but high reward; while compliant institutions and main funds are accelerating withdrawals from the spot market and paying sky-high premiums in options to build short hedges.

The current market resembles a confrontation between “retail waiting” and “institutional defense,” rather than a bottom rebound in the making. Under this structural split, paying close attention to whether the key support at $85,000 is broken is more practically valuable than waiting for a breakthrough at $100,000. Investors should focus on whether market liquidity can truly recover and whether the pace of institutional withdrawals can slow down.