The global market is experiencing the worst crash since March 2020. The Nasdaq index lost 12% of its market value in two days. Gold and Bitcoin fell at the same time, which is rare. Traditional safe-haven assets have completely failed. The cryptocurrency market has also experienced a huge plunge, with Bitcoin and Ethereum taking the lead.

1. Market analysis: Three major contradictions at the center of the storm

The root cause of the current crash in the cryptocurrency market lies in the interaction of three contradictions:

1. Escalation of global trade war and disruption of supply chain

The 34% tariff imposed by the United States on China has directly impacted the global electronics and new energy industry chains. Coupled with the countermeasures from China and the European Union, companies are forced to pass on the tariff costs, and the market's panic about "stagflation" has reached a critical point.

2. Liquidity trap and asset stampede in the cryptocurrency circle

Bitcoin plummeted from $85,000 to $71,000, with intraday volatility soaring to 98%, and gold's daily volatility hit a new high since 1983. During the plunge, institutions were forced to sell the most liquid assets to cover margins, forming a death spiral of "three kills of stocks, bonds and coins". At this time, the implied volatility of Bitcoin options exceeded 150%, indicating a surge in market demand for hedging against extreme market conditions.

3. U.S. crypto regulation loosens and institutions enter the market

Trump's new policy has promoted the approval of Bitcoin ETF options, and 11 institutions have obtained SEC licenses, allowing them to hedge risks through regulated derivatives. Data shows that the daily Bitcoin option trading volume on April 6 exceeded US$20 billion, and the put/call ratio (PCR) reached 1.8, a record high. The leverage effect of the derivatives market accelerated the formation of a huge wave of plunges.

2. Market Forecast: Three Possible Scenario Possibilities after the Crash

The current market has entered a period of "panic-rebound-panic again", and the trend of cryptocurrencies such as Bitcoin will show three possible paths:

Scenario 1: Step-by-step rebound (lower probability)

If the Fed cuts interest rates by 50 basis points in April, it may trigger a short-term rebound. From a technical perspective, Bitcoin needs to stabilize at $78,000 (Fibonacci 38.2% retracement level), with the target of covering to the $83,000-85,000 range. At this time, the premium of out-of-the-money call options (such as an exercise price of $90,000) may triple.

Scenario 2: Second bottom (higher probability)

After the trade war tariffs take effect on April 9, if the US-China negotiations break down, Bitcoin may drop to $65,000 (the low point in December 2024). At this time, we need to be vigilant about the on-chain data. The giant whale address holding 1,000+ BTC has increased its holdings by 120,000 in the past three days, which is suspected to be a low-level accumulation.

Scenario 3: Black Swan Explosion (Very Low Probability)

If a geopolitical conflict or liquidity crisis breaks out, Bitcoin may crash to $50,000. However, historical data shows that option arbitrage opportunities are the most lucrative in such extreme market conditions: during the LUNA crash in 2022, Bitcoin's deep out-of-the-money put options (strike price of $30,000) soared 5,000%.

3. Option strategy: a rational choice in a crash

When IV soars to historical highs, options are the best tool for asymmetric returns. The following four strategies can be targeted to different scenarios:

Strategy 1: Protective Put (Must-have for Spot Holders)

• Operation : For every BTC spot you hold, buy a put option with a one-month expiration date and an exercise price 5% lower than the current price (e.g., if the current price is 72,000, choose 68,000 to exercise)

• Cost : Premium of about 8-12% (IV premium)

• Effect : If BTC drops to $60,000, the option profit will be $12,000, which can offset about 60% of the spot loss.

Strategy 2: Neckline combination (institutional favorite)

• Operation : Buy out-of-the-money put option + sell out-of-the-money call option

• Cost : Net premium expenditure is close to 0 (selling call covers the cost of buying put)

• Effect : Protection for falling prices, profit for option sellers when prices rise, suitable for volatile markets

Strategy 3: Straddle (betting on volatility)

• Operation : Buy put and call options with at-the-money strike prices at the same time (same expiration date)

• Cost : Double the premium (about 15-20%)

• Effect : If BTC volatility exceeds ±15%, the return can reach 3-5 times the principal

Strategy 4: Bear Spread (betting on a failed rally)

• Operation : Buy at-the-money put option at 75,000 + sell out-of-the-money put option at 65,000 (1:1 ratio)

• Maximum profit : $10,000 per contract

• Margin of safety : Even if the judgment is wrong, the upper limit of loss is the net premium expenditure (about 5%)

4. Risk management: learning from the bitter lessons of the past

In extreme market conditions, risk control is more important than pursuing returns. Combining the practical experience of Wall Street and cryptocurrency traders, we summarize three major risk control lessons:

First, the investment in a single strategy should not exceed 5% of the total funds. The premium of the option buyer's position should be ≤ 2% of the account's net value.

Second, dynamically transfer positions to harvest panic premium. When IV drops from 150% to 100%, option sellers can move the current month contract to a more out-of-the-money price in the next month. For example, after making a profit, you can close a 70,000 put position and switch to a 60,000 put position.

Third, always keep cash bullets and reserve 30% of funds for covering positions in extreme market conditions. For example, when BTC falls below 60,000, you can buy spot + deep out-of-the-money call options.

In short, option strategies can effectively seize structural opportunities in crises. History has repeatedly proved that a crash is a window for wealth redistribution. When others are afraid, Bitcoin options provide us with precise arbitrage tools, which can be used as "explosion shields" and straddle combinations as "volatility harvesters". In this era of frequent black swans, we do not predict the direction of the market, but are always prepared to follow the trend and trade volatility.