Deribit Reports Increased Demand for Bitcoin Downside Hedges After Fed Cuts Rates

Bitcoin (BTC) traders are continuing to hedge against downside risk, keeping put options priced at a premium across all maturities, even amid recent bullish signals, according to Deribit CEO Luuk Strijers.

Macro Signals and Market Context

Earlier this week, the U.S. Federal Reserve reduced interest rates by 25 basis points and indicated that an additional 50 basis points of easing could occur by year-end. Meanwhile, the SEC unveiled a streamlined approval process for crypto ETFs, aimed at accelerating listings and boosting market participation.

Despite these developments, Deribit’s DVOL index — measuring 30-day implied volatility — remains subdued at 24%, the lowest level in two years. Typically, bullish markets make call options more expensive than puts, but on Deribit, puts continue to trade at a premium.

Options Skew Shows Cautious Sentiment

“Skew across all time frames remains flat to negative,” Strijers explained. “Traders are buying puts to hedge downside risk, while call overwriting is limiting upside pressure.”

Options skew reflects the difference in implied volatility between calls and puts. Negative skew indicates bearish sentiment, while positive skew signals bullish expectations. Currently, 7-, 30-, 60-, and 90-day skews are slightly negative, and the 180-day skew is neutral, according to Amberdata, pointing to ongoing concern over potential BTC corrections.

Investors may be cautious that the Fed’s rate cut was already priced in 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,” Strijers noted. “The market appears to be waiting for the next catalyst — whether macroeconomic or crypto-specific — to shift positioning out of this balance between caution and optimism.”

Signs of Market Maturity

Sidrah Fariq, Deribit’s global head of retail sales and business development, said the persistent put bias reflects a maturing options market.

“BTC options are behaving increasingly like S&P index options — a sign of maturity, but also of caution,” Fariq said.

Additionally, traders are employing covered calls, selling call options against spot BTC holdings to generate income. While this strategy can cap upside, particularly for longer-dated options, it has become increasingly popular among BTC, ETH, and XRP traders, contributing to the continued put-heavy positioning.

About The Author

ctleditor

See author's posts