Crypto Traders Hedge Bets as Trump’s Digital Asset Reserve Underwhelms
Short-term put options for Bitcoin (BTC), Ether (ETH), and Solana (SOL) are in high demand, trading at a premium relative to calls as traders seek downside protection, according to Block Scholes.
On Thursday, U.S. President Donald Trump signed an executive order establishing a digital asset reserve to hold BTC and altcoins seized in enforcement actions. However, the reserve will not make new purchases, limiting its market impact and leaving traders disappointed.
The lack of fresh buying pressure has led traders to increase demand for short-dated put options on BTC, ETH, and SOL, according to Deribit data tracked by Block Scholes. Meanwhile, XRP has remained resilient despite the market’s cautious sentiment.
Market Signals Show Increased Downside Protection
Put options give traders the right to sell an asset at a fixed price, providing insurance against potential declines.
Implied volatility skews, which measure demand for puts versus calls, indicate that short-term BTC, ETH, and SOL puts are trading at a premium—suggesting growing concerns over downside risks.
“Short-tenor skews for BTC, ETH, and SOL options continue to favor puts, showing traders hedging against potential declines. However, longer-dated expiries beyond April remain bullish for BTC and ETH, while XRP options maintain a positive skew across all durations beyond one week,” said Andrew Melville, research analyst at Block Scholes.
He noted that derivatives markets are reacting to the crypto community’s disappointment over Trump’s strategic reserve, which many had hoped would involve active purchases.
At the same time, BTC and ETH term structures are flattening, moving away from the highly inverted positioning seen in March. Front-end volatility has also dropped sharply as traders adjust their positions ahead of key market events on Friday.
Eyes on Crypto Summit and Economic Data
With regulatory uncertainty still looming, all eyes are now on Friday’s White House Crypto Summit, where traders hope for clearer policy direction.
“The summit’s outcomes could be pivotal in shaping institutional sentiment and regulatory clarity around digital assets. Key issues include clearer token classification, potential tax incentives, and signs of relaxed enforcement, all of which could lower barriers for banks and funds looking to enter the space,” said Ryan Lee, chief analyst at Bitget Research.
Lee added that major signals to watch include specifics on securities laws, the reserve’s framework, and any hints of legislative backing. Strong support could spark a bullish breakout, while vague or inconclusive guidance may lead to further market volatility.
Meanwhile, traders are also watching the U.S. nonfarm payrolls (NFP) report for February, set to be released at 13:30 UTC. The report is expected to show job gains of 160K, up from January’s 143K, with unemployment holding steady at 4%. Wage growth is projected to slow slightly to 0.3% month-over-month from 0.5% in January.
A weaker-than-expected jobs report could fuel expectations for multiple Federal Reserve rate cuts in 2025, which could provide support for risk assets like BTC.
Interest Rate Uncertainty and Inflation Risks
Despite growing market confidence in rate cuts, some analysts warn that expectations may be overly optimistic.
“Markets have shifted toward expecting three rate cuts this year instead of just one. However, the Federal Reserve is unlikely to rush into easing, as it will need time to assess the inflationary impact of Trump’s tariffs,” said Markus Thielen, founder of 10x Research.
Thielen also noted that under Trump, the so-called “Fed put”—the level at which the central bank would intervene to support markets—could be lower than it would under a Democratic administration, meaning policymakers may tolerate more volatility before stepping in.
With regulatory decisions and economic data on the horizon, traders remain on edge about the crypto market’s next move.
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