Bitcoin traders seek protection against possible decline as they await comments from Fed Chairman Powell
Deribit's CEO told CoinDesk that there has been little differentiated interest in protective put options on BTC, indicating limited caution among experienced traders.
Author: Omkar Godbole | Edited by: Parikshit Mishra Updated: May 6, 2025 12:40 PM Published: May 6, 2025 12:36 PM
What is important to know:
- There is moderate risk aversion in the Bitcoin options market listed on Deribit ahead of expected comments from Federal Reserve Chairman Jerome Powell on a potential interest rate cut in June.
- Traders on Derive.XYZ are buying put options with strikes of $82K, $78K and $76K.
- Bank of America expects Powell to keep the option of cutting interest rates in June even if markets remain at their previous levels.
Bitcoin (BTC) options data point to modest risk aversion ahead of Federal Reserve Chairman Jerome Powell's expected comments on a possible June interest rate cut scheduled for Wednesday.
“While the Federal Reserve is expected to keep rates on hold at this week’s meeting, we have seen only modest differential interest in BTC protective put options, demonstrating limited caution among experienced traders,” said Luke Stryers, CEO of leading crypto options exchange Deribit.
A put option gives the buyer the right, but not the obligation, to sell the underlying asset at a predetermined price on or before a specified date. This can be thought of as insurance against sharp price movements. Traders typically purchase put options when they want to profit or protect their long positions in the spot market from market declines.
Deribit is the world's leading crypto options trading platform, recording billions of dollars in trading volume daily. On Deribit, one option contract is worth one BTC.
Stryers explained that the options market as a whole has not shown a clear direction or active bias towards hedging the downside.
“Spot BTC has pulled back to around $94k and Deribit’s DVOL, our implied volatility index, is at 45, levels we last saw in June 2024. Overall, this suggests moderate risk aversion, but not panicked defense,” Stryers added.
DEX Traders Show Interest in Puts
At the same time, traders operating on the decentralized exchange Derive.XYZ are being very cautious and concerned about downside risks.
“There is evidence of a bid for downside protection as traders are also buying puts at $82k, $78k and $76k strikes, likely due to concerns about the Federal Reserve Board meeting leading to no rate cuts or worse, a rate hike,” CoinDesk reported.
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