Amid recent market volatility, Bitcoin ($BTC ) and Ether ($ETH )have both seen nearly a 10% recovery from Friday’s lows, driven by bullish signals in order books and anticipation of a Federal Reserve interest rate cut. However, traders are showing caution in the short term, focusing on downside risks for the two largest cryptocurrencies.
Data from options trading reveals a bias towards put options—bearish bets—on both Bitcoin and Ether. According to QCP Capital, risk reversals until October show a clear skew toward puts on Deribit, indicating market concerns about further downside. This caution stems from last week’s steep dip and the continued uncertainty surrounding the macroeconomic environment, particularly with a looming rate cut from the Fed.
Despite the recovery to around $57,000 for Bitcoin, many traders are bracing for potential further drops. Deribit data shows heavy put option activity, with levels targeting $49,000 to $53,000 for Bitcoin, and even some fear of a move down to $40,000. Historically, Fed rate cuts have been followed by periods of recession and risk aversion, adding to market anxieties.
While Bitcoin and Ether show signs of potential weakness, Solana ($SOL ) stands out as relatively resilient. Options data indicates traders are more bullish on SOL, with a positive one-month skew favoring calls, suggesting greater demand for upside potential. In contrast, Ether’s options skew remains negative, pointing to heightened concern over downside risks.
This divergence signals that traders see Solana as better positioned to weather short-term market turbulence, while Ether faces more volatility and risk. As the market braces for key inflation data and the upcoming Fed meeting, cautious sentiment persists across the board, with Solana emerging as a potential bright spot amidst uncertainty.
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