Traders in the Bitcoin market are increasingly taking steps to protect themselves against a possible downturn, reflecting a heightened level of caution as the broader financial landscape shows signs of retreat ahead of significant U.S. economic reports.
The options market, where investors engage in contracts to speculate on or safeguard against future price fluctuations, indicates that traders are adopting a defensive stance.
Nick Forster, the founder of the on-chain derivatives platform Derive.xyz, noted a surge in the demand for protective contracts, especially for put options, which provide holders the option to sell Bitcoin at a predetermined price.
“Currently, derivatives are set defensively, as the immediate 25-delta call/put skews have dropped to the lowest levels since 2025,” Forster mentioned.
In layman’s terms, traders are investing more in downside protection than at any other point this year, many targeting contracts that would let them sell Bitcoin within the $75,000 to $70,000 range until the end of March.
Conversely, the interest in call options, which allow the purchase at a fixed price, has decreased.
Many previously favorable contracts, based on Bitcoin’s current market value, are now set at higher levels, resulting in traders expressing less urgency in betting on a swift price increase.
“This is leading to subdued volatility across the board, with little enthusiasm reaching the $100,000 mark,” Forster added. “The existing market presents uncertainty, and traders are gearing up for possible fluctuations in both directions.”
Early trading sessions in Asia have shown some mixed signals, according to QCP Capital, as demand for long-term topside calls—options that benefit from a price recovery—has started to rise.
“This could indicate that traders are positioning for a rapid rebound from the $75,000 support level observed before the election,” QCP shared in a note on Tuesday.
Indeed, the price of Bitcoin has surged by 3.8% to reach 82,375 in the last 24 hours, recovering some of the earlier losses close to the $77,000 mark.
Regardless, the cautious sentiment within Bitcoin trading reflects a wider market attitude.
On Monday, the S&P 500 declined by 0.76%, while the Dow Jones Industrial Average dropped by 1.14%, as investors prepare for the forthcoming Consumer Price Index (CPI) report set for release on Wednesday.
Economists project a 0.3% rise in headline inflation for February, potentially lowering the annual CPI rate to 2.9%, according to MarketWatch.
This may provide some reassurance to risk assets, such as cryptocurrencies and stocks, whilst also giving the Federal Reserve increased confidence in determining when to embark on its next cycle of rate cuts, Decrypt reports.
In Europe, the STOXX 600 index fell by 1.43%, while oil prices saw a slight increase, with Brent crude priced at $69.97 per barrel.
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