Market caution signals that Bitcoin traders are preparing for volatility instead of expecting a long-term rally, according to Cgpt.news.
Bitcoin traders are growing increasingly cautious, employing options contracts to safeguard against potential price drops. This defensive shift aligns with a broader retreat in financial markets as investors await critical U.S. economic data.
In the options market, where contracts allow speculation or protection against future price movements, traders are adopting a guarded approach. Nick Forster, founder of the onchain derivatives platform Derive.xyz, highlights a surge in demand for put options—contracts that let holders sell Bitcoin at a predetermined price. “Derivatives are positioned defensively right now, with the immediate 25-delta call/put skews hitting 2025 lows,” Forster noted. This indicates traders are paying a premium for downside protection, the highest this year, with many targeting contracts to sell Bitcoin between $75,000 and $70,000 through March’s end.
Conversely, interest in call options, which enable buying Bitcoin at a set price, has declined. Contracts once profitable at Bitcoin’s current price are now set at higher thresholds, suggesting traders are less optimistic about a swift price surge. “This is creating muted volatilities across the board, with little excitement up to the $100,000 range,” Forster added. “The market feels uncertain, and traders are gearing up for swings in either direction.”
Yet, mixed signals have surfaced. QCP Capital observed that early Asian trading showed rising demand for longer-term call options, which profit from price recoveries. “This potentially signals positioning for a swift rebound from the $75,000 support level seen pre-election,” QCP stated in a Tuesday note. Bitcoin’s price has indeed climbed 3.8% to $82,375 in the last 24 hours, rebounding from earlier dips near $77,000. Still, the cautious stance in Bitcoin trading echoes wider market sentiment.
On Monday, the S&P 500 dipped 0.76%, and the Dow Jones Industrial Average fell 1.14%, as investors prepared for Wednesday’s Consumer Price Index (CPI) report. Economists predict a 0.3% rise in February’s headline inflation, lowering the annual CPI rate to 2.9%, per MarketWatch. A softer inflation figure could ease pressure on risk assets like crypto and stocks, potentially bolstering the Federal Reserve’s confidence in planning its next rate cuts, according to Cgpt.news. In Europe, the STOXX 600 index slid 1.43%, while Brent crude rose slightly to $69.97 per barrel.
