Bitcoin Traders Favor Put Contracts Amid Risk Aversion

Option market data indicates a pronounced risk-averse sentiment among traders, who are actively hedging against the potential for a decline in Bitcoin (BTC) prices. This cautious approach is evident in the growing imbalance favoring put contracts over call options, as traders seek to protect their portfolios from downside risks. The preference for put contracts, which are used to hedge against or profit from price declines, underscores the prevailing market sentiment of risk aversion.

The put/call volume ratio on cryptocurrency derivatives exchange Deribit surged to 2.17 over the past 24 hours, reflecting a strong risk-averse sentiment. There has been a notable surge in demand for put options—downside protection instruments giving holders the right to sell at a specified price—especially for short-term contracts. Among options expiring on June 20, the $100,000 strike price put options have the highest open interest, with a put/call ratio standing at 1.16, highlighting concerns about short-term downside risks in the market.

The cautious sentiment in the market stems from the highly uncertain environment faced by Federal Reserve policymakers—ranging from geopolitical tensions in the Middle East and energy price volatility, to inflation and labor market risks intensified by the Trump administration's tariff policies. As the Federal Reserve is expected to hold interest rates steady for the fourth consecutive time later this Wednesday, market focus will shift to its latest projections on economic growth, unemployment, and interest rates.

"Hawkish signals from the Federal Reserve could strengthen the U.S. Dollar Index and potentially test the $100,000 psychological threshold," said XBTO CIO Javier Rodríguez-Alarcón in a research note. "Meanwhile, the geopolitical landscape remains the biggest wildcard: any credible de-escalation in the Middle East could act as a catalyst for risk appetite, whereas an escalation could trigger another round of selloffs in risk assets."

The institutional impact on the market is also notable, with Bitcoin ETF holdings experiencing a significant drop. Between June 10 and June 15, 2025, institutional investors reduced their Bitcoin ETF holdings by 1,800 BTC, reflecting a broader trend of risk aversion in the market. This reduction in holdings suggests that institutional investors are also taking steps to mitigate potential losses in the event of a price drop.

The overall market sentiment is further influenced by the recent performance of Bitcoin and other major cryptocurrencies. Bitcoin, Ethereum, and Ripple prices have been hovering around key levels, with the crypto market turning risk-averse amid growing uncertainty. This risk aversion is not limited to the crypto market but is also evident in broader market conditions, where investors are adopting a more cautious stance.

The shift towards risk aversion is also reflected in the strategies employed by traders and investors. For more risk-averse investors, the focus is on diversifying revenue sources and adopting strategies that minimize downside risks. This approach is evident in the growing use of put contracts and the reduction in Bitcoin ETF holdings, as investors seek to protect their portfolios from potential market downturns.

In summary, the current market sentiment is characterized by a strong risk-averse attitude, with traders and institutional investors taking steps to hedge against the risk of a BTC price drop. The growing imbalance in favor of put contracts and the reduction in Bitcoin ETF holdings are clear indicators of this cautious approach, as market participants seek to navigate the uncertain market conditions.