Why Bitcoin Traders Are Betting on Doom After Fed’s Rate Cut

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Imagine, if you will, a universe where digital money exists, and people are constantly fretting about its ups and downs. This is not science fiction; this is the Bitcoin market.

What to know (or pretend to know):

  • Bitcoin traders are buying insurance against doom despite the Federal Reserve cutting rates like it’s trimming hedges.
  • The SEC has introduced a new standard for crypto ETFs, which is supposed to make things faster but probably won’t.
  • Deribit’s options skew suggests that everyone is secretly bearish, even though they smile politely at parties.

Bitcoin traders, those intrepid explorers of volatility, continue to hedge their bets against the possibility that everything might go horribly wrong. This is despite the Fed waving its magic wand and cutting rates by 25 basis points, with another 50 basis points promised like a dodgy coupon. Meanwhile, the SEC has unveiled a new listing standard for crypto ETFs, which is supposed to speed things up but will likely just add another layer of bureaucratic confusion.

Deribit’s DVOL index, which measures 30-day implied volatility, is currently lounging around at 24%, its lowest in two years. Historically, this is when traders start getting all bullish and excited, causing call options (bets on price increases) to become pricier than put options (insurance against price drops). But on Deribit, puts are still the cool kids, trading at a premium across all time frames.

“Skew across all time frames remains flat to negative,” explained Luuk Strijers, Deribit’s CEO, who probably spends his weekends explaining skew to confused relatives. “We continue to see demand for puts to hedge downside exposure, while call overwriting flows are pressuring the topside.” Deribit, by the way, is the world’s largest crypto options exchange, handling over 80% of global activity. So, when they talk, people pretend to listen.

Options skew measures the difference in implied volatility between call and put options for a given expiration. A negative skew means traders are secretly convinced Bitcoin is about to nosedive, while a positive skew means they’re optimistically dreaming of Lamborghinis. Currently, the skew is slightly negative for seven, 30, 60, and 90 days, with the 180-day skew sitting on the fence, according to Amberdata.

Investors buying puts might be worried that the Fed’s rate cut was already baked into the market, like a soufflé that didn’t rise. Or, perhaps, they’re concerned that a worsening economic outlook might reduce demand for risky assets like Bitcoin. Because, you know, Bitcoin is famously stable. 🙃

“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.” In other words, everyone’s just sitting around, staring at their screens, waiting for something to happen.

Sidrah Fariq, Deribit’s global head of retail sales and business development, pointed out that the persistent put bias is actually a sign of market maturity. “In some sense, BTC options are behaving more like S&P index options – a sign of maturity, but also of market caution,” she said. So, Bitcoin is growing up, but it’s still a moody teenager.

Additionally, traders writing covered calls – selling call options against their holdings to collect premiums – may be contributing to the put bias, especially in longer-dated options. This strategy generates extra income but caps upside potential, kind of like selling your soul for a steady paycheck.

Covered calls have become a popular strategy among BTC, ETH, and XRP traders in recent years. Because what’s more exciting than limiting your potential gains for a bit of extra cash? Exactly. Nothing.

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2025-09-19 11:09