Bitcoin Traders Ramp Up Downside Protection Post-Fed Rate Cut: Deribit Data Reveals

Bitcoin's volatility just got a whole lot more expensive to insure against.

Fed's Latest Move Sparks Defensive Positioning

Traders are piling into put options like there's no tomorrow—Deribit reports a noticeable spike in downside protection contracts following the central bank's rate decision. Nobody's taking chances with Powell's poker face anymore.

Options Market Heats Up

The numbers don't lie: protection buying surged right after the announcement. Because nothing says 'confidence' like betting against your own portfolio—classic Wall Street logic, just with more blockchain.

Smart Money or Scared Money?

Either traders know something the rest of us don't, or they've just seen one too many Fed-induced flash crash. Either way, the options market's buzzing louder than a miner farm during a bull run.

Because in crypto, even the 'safe' bets feel like gambling—especially when the Fed's dealing the cards.

Currently, the seven, 30, 60, and 90 day skews are slightly negative, with the 180 day skew neutral, according to data source Amberdata.

This indicates persistent concerns about a possible BTC correction.

Investors buying puts may be concerned that the Fed’s easing was already factored into the market ahead of the decision and that a deteriorating economic outlook could reduce demand for riskier assets, such as bitcoin.

"After the Fed’s decision, some of the earlier Optimism has faded. The market now seems to be waiting for the next catalyst — whether macro or crypto-specific — to break the stalemate and push option positioning out of its current balance between caution and optimism," Strijers said.

Sidrah Fariq, global head of retail sales and business development at Deribit, said the persistent put bias represents market maturity.

"In some sense, BTC options are behaving more like S&P index options - a sign of maturity, but also of market caution," Fariq said.

Additionally, traders writing covered calls – selling call options against their spot holdings to collect premium – which may be contributing to the put bias, particularly in longer-dated options. This strategy generates additional income but can cap upside potential.

Covered call has emerged as a popular strategy among BTC, ETH and XRP traders in recent years.