Crypto Traders Hedge as Trump’s Digital Asset Reserve Falls Short
Short-dated put options tied to Bitcoin (BTC), Ether (ETH), and Solana (SOL) are trading at a premium relative to calls, signaling increased downside protection demand, according to Block Scholes.
On Thursday, U.S. President Donald Trump signed an executive order establishing a digital asset reserve to hold BTC and other seized altcoins. However, the reserve will not actively purchase new assets, serving only as a strategic stockpile rather than a market participant.
The lack of fresh buying pressure has left traders disappointed, leading to increased demand for short-term put options on BTC, ETH, and SOL, as per Deribit data tracked by Block Scholes. Despite the cautious sentiment, XRP remains resilient.
Rising Demand for Downside Protection
Put options grant the right to sell an asset at a predetermined price, providing a hedge against potential price declines.
Skew data, which measures the difference in implied volatility between lower-strike puts and higher-strike calls, shows short-term BTC, ETH, and SOL puts commanding a premium—an indication of bearish sentiment.
“Short-tenor skews for BTC, ETH, and SOL options continue to reflect demand for puts. However, expiries beyond April still maintain a bullish tilt for BTC and ETH, while XRP options maintain a positive skew across all tenors beyond one week,” said Andrew Melville, a research analyst at Block Scholes.
He noted that derivatives activity mirrors the market’s disappointment following Trump’s long-anticipated Strategic Reserve executive order.
Meanwhile, both BTC and ETH’s term structures are flattening after being significantly inverted for most of March. At-the-money volatility at the front end has dropped over 10 points as traders adjust their expectations ahead of Friday’s key macro events.
Crypto Summit and Economic Data in Focus
Market participants are now turning their attention to Friday’s White House Crypto Summit, hoping for regulatory clarity that could influence institutional adoption.
“The outcomes could reshape the regulatory landscape by clarifying token classifications, introducing tax incentives, and reducing enforcement actions—potentially removing hurdles for banks and institutional investors,” said Ryan Lee, chief analyst at Bitget Research.
Key signals to watch include clearer securities regulations, specifics on the reserve’s structure, and potential leniency from regulatory figures like SEC Commissioner Mark Uyeda. Any indication of legislative backing could drive a bullish reaction, while vague or inconclusive statements may add to market volatility.
Additionally, traders are eyeing the U.S. nonfarm payrolls (NFP) report for February, set for release at 13:30 UTC. Analysts expect job creation to rise to 160K from January’s 143K, with the unemployment rate holding steady at 4%. Average hourly earnings are projected to increase by 0.3% month-over-month, down from 0.5% in January.
A weaker-than-expected jobs report could reinforce expectations for at least three Federal Reserve rate cuts this year, potentially providing a boost to risk assets like BTC.
Interest Rate Uncertainty
Despite shifting market expectations toward multiple rate cuts, some analysts remain skeptical.
“The market now expects three rate cuts in 2025 instead of just one. However, the Federal Reserve is likely to remain cautious, as Trump’s tariff policies could have inflationary effects that take months to assess,” said Markus Thielen, founder of 10x Research.
He also noted that under a Trump administration, the “Fed put”—the level at which the central bank intervenes to support markets—may be set lower than under a Democratic administration, meaning policymakers might allow greater market volatility before stepping in.
With regulatory developments and macroeconomic shifts in focus, traders remain cautious about the near-term trajectory of the crypto market.
