Traders Purchase More Bitcoin Downside Insurance in Wake of Fed Rate Cut, Says Deribit

Bitcoin (BTC) traders are continuing to hedge against potential downside, keeping put options at a premium across all time frames, despite recent bullish signals, according to Luuk Strijers, CEO of crypto derivatives exchange Deribit.

Market Context

Earlier this week, the U.S. Federal Reserve cut interest rates by 25 basis points and indicated that an additional 50 basis points of easing could occur by year-end. Meanwhile, the SEC introduced a new generic listing standard for crypto ETFs, expected to accelerate approvals and support broader market activity.

Despite these positive developments, Deribit’s DVOL index, which tracks 30-day implied volatility, remains subdued at roughly 24%, the lowest level in two years. Typically, low volatility environments with bullish sentiment make call options — bets on price rises — more expensive than put options, which provide downside protection. However, at Deribit, put options continue to trade at a premium across all maturities.

Options Skew Reflects Caution

“Skew across all time frames remains flat to negative,” Strijers said. “We continue to see demand for puts to hedge downside exposure, while call overwriting flows are pressuring the topside.”

Options skew measures the implied volatility difference between call and put options for a given expiration. A negative skew suggests bearish sentiment, while a positive skew indicates bullish expectations. Currently, 7-, 30-, 60-, and 90-day skews are slightly negative, with the 180-day skew neutral, according to Amberdata. This reflects persistent concern over a potential BTC correction.

Investors buying puts may be wary that the Fed’s easing was already priced in, and that a weakening economic outlook could reduce demand for riskier assets like bitcoin.

“After the Fed’s decision, some of the earlier optimism has faded,” Strijers said. “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.”

Market Maturity and Strategy

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

“In some sense, BTC options are behaving more like S&P index options — a sign of maturity, but also of market caution,” Fariq explained.

Traders are also increasingly using covered calls, selling call options against their spot BTC holdings to collect premiums. This strategy can generate additional income but caps upside potential, particularly in longer-dated options. Covered call strategies have gained popularity among BTC, ETH, and XRP traders in recent years, further contributing to the current put bias.