Bitcoin's (BTC) recent near-vertical rise has some traders seeking protection against a potential leverage washout and price pullback.

The leading cryptocurrency by market value topped $59,000 on Wednesday, marking a 40% rise in four weeks and outpacing a 31% rally in the CD20, a gauge of the wider crypto market. The advance is consistent with the cryptocurrency's record of chalking out impressive rallies in the weeks leading up to the mining reward halving. The Bitcoin blockchain's fourth halving, due in April, will reduce the per-block emission to 3.125 BTC.

While the consensus is that that event, coupled with the strong inflows into the U.S.-based exchange-traded funds (ETFs), implies a supply-demand imbalance and potential for a continued move higher, some traders have started to position for a sharp decline. They have begun snapping up bitcoin puts, or options to sell, at strike prices well below the going market rate because perpetual funding rates point to a market that's overheated and may witness a correction, a drop of more than 10%.

A put option gives the purchaser the right, but not the obligation, to sell the underlying asset at a predetermined price on or before a specific date. A put buyer is implicitly bearish on the market or is seeking a downside hedge to a long position in the spot/futures market. A call buyer, who has the right to buy the asset, is implicitly bullish.

"The whales are buying a lot of puts under $50,000, likely spot holders to protect profits," crypto block trading service provider Greeks.Live told CoinDesk in a Telegram chat, referring to owners of large amounts of bitcoin.

In the past 24 hours, over 50 block orders with a notional value of more than $5 million have crossed the tape on Greeks.Live. Of these, several are active buy positions in the lower strike out-of-the-money puts.

"This market phenomenon is relatively rare, occurring only a few times in history in large spot-driven bull markets where spot holders buy puts for protection," Greeks.Live said. "While holding spot to get the most explosive acceleration of the bull market topped out, while a small portion of the profit will be taken out to buy OTM puts."