Definition ∞ Put option demand refers to the market’s collective interest in acquiring put options for a specific digital asset, indicating a desire to hedge against potential price declines or speculate on a downward movement. An increase in put option demand suggests growing bearish sentiment or a heightened need for portfolio protection among investors. This metric can serve as an indicator of anticipated future volatility or price depreciation. It reflects market participants’ downside expectations.
Context ∞ News reports on the digital asset derivatives market often analyze trends in put option demand to gauge investor sentiment and potential future price action. A surge in put option demand might be interpreted as a sign of impending market weakness or a widespread effort by institutions to protect their holdings. Monitoring this metric offers valuable context for understanding risk perception and strategic positioning within the crypto ecosystem.
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