Bitcoin (BTC) continues to hit new all-time highs, but the latest trends in options markets suggest that traders are no longer chasing the uptrend with the same fervor as they did in the past.
On Monday, Bitcoin’s price surged past $107,000, breaking its previous high from December 5 and pushing the post-U.S. election gain to over 50%, according to CoinDesk data. This rally follows President-elect Donald Trump’s announcement that the U.S. will establish a Bitcoin strategic reserve similar to the country’s oil reserve. Analysts predict that Bitcoin’s momentum could continue next year, with prices potentially reaching between $150,000 and $200,000 by the end of 2025.
However, despite these gains, options pricing on platforms like Deribit indicates a more cautious outlook among traders. Unlike previous rallies, traders are not pursuing the uptrend with the same aggressive approach.
As of the latest data, the 25-delta risk reversal for options expiring on Friday is negative, reflecting a higher demand for put options (which provide protection against price drops) compared to calls. Puts expiring on December 27 are slightly more expensive than calls, while risk reversals extending through March show a modest call bias, with only a difference of three volatility points. This is in stark contrast to recent weeks, when traders aggressively pursued price peaks, driving risk reversals with a call bias of four to five volatility points. In some cases, short-term risk reversals even exhibited a stronger call bias than long-term ones.
Recent block trades tracked by Amberdata also suggest a bearish tilt. The largest trade on Deribit today was a short position in a December 27 call option at the $108,000 strike price, followed by long positions in $100,000 strike puts expiring on December 27 and January 3.
This cautious sentiment may be driven by expectations that the Federal Reserve could signal fewer or slower rate cuts for 2025, even as it is widely anticipated to implement a 25 basis point rate cut. Such a move could strengthen the dollar and push bond yields higher, which may reduce the attractiveness of riskier assets like Bitcoin. It’s possible that more sophisticated Bitcoin traders are positioning themselves in anticipation of a potential market correction.
