Bitcoin Options Traders Step Up Downside Hedges as Uncertainty Lingers

Bitcoin options traders typically buy puts before major Federal Reserve decisions to insure against a sudden decline. This time, demand for near-term protection is receding, suggesting investors expect the central bank’s July meeting to pass without a major shock. The unusually light hedging, however, could leave the market more exposed if the policy statement, economic projections or incoming data depart from expectations, allowing price moves to accelerate rather than be absorbed.

Glassnode data showed the put-to-call ratio for open interest falling to about 0.52 by July 27 from roughly 0.76 in late June. One-week 25-delta skew dropped to around 4%, compared with 11% to 12% for three- and six-month contracts, while one-week implied volatility stood at 34.3% versus 40.8% for six months. The Fed is due to announce its decision on July 29, with markets pricing about a 15% chance of a rate increase. Bitcoin traded near $65,000, while large investors accumulated $70,000 calls and bull call spreads.