Bitcoin (BTC) is trading slightly lower on Tuesday, down 0.6% to $93,931, extending a slow decline that has seen the leading cryptocurrency fall 1% over the past week. Still, Bitcoin is up 14.14% over the past month, buoyed by institutional inflows and persistent demand for safe-haven assets amid macro uncertainty.
Tuesday’s trading reflects a more cautious tone, though. As markets await Federal Reserve Chair Jerome Powell's post-FOMC comments on Wednesday, data from the options market suggests that traders are seeking downside protection—though not in a panic.
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“We have only seen some nuanced demand for protective BTC puts, reflecting limited caution among sophisticated traders,” Luuk Strijers, CEO of crypto options exchange Deribit, told CoinDesk.
Strijers added that implied volatility is subdued. "Spot BTC has retraced to around $94K, and Deribit's DVOL, our implied volatility index, sits at 45—levels we last observed in June 2024.”
On decentralized platforms like Derive.XYZ, however, traders appear more risk-averse. Put options at $82K, $78K, and $76K are seeing interest. Dr. Sean Dawson, head of Research at Derive.XYZ, told CoinDesk that there is "evidence of downside protection," surroudning concerns over the Fed meeting.
The Fed is expected to keep rates steady at 4.25%-4.50%, but markets will watch for any forward guidance. A hotter-than-expected jobs report last week has dampened hopes of a June rate cut, with odds falling to 30%.
If Powell pushes back against easing or hints at prolonged hawkishness due to inflation or trade risks, risk assets like BTC could come under pressure.
Additional headwinds come from Capitol Hill. According to CoinDesk, Senate Democrats are expressing renewed hesitation over stablecoin legislation due to President Trump's growing personal involvement in crypto-linked ventures, including World Librety Financial WLFI/USD and other meme tokens.
The optics of a regulatory process potentially benefiting the president have made bipartisan consensus elusive.
Bitcoin ETFs saw three straight days of net inflows, suggesting that long-term institutional appetite remains intact. U.S. Treasury Secretary Scott Bessent's recent comment that American interest rates now reflect sovereign credit risk adds fuel to the argument that crypto is becoming a hedge against political dysfunction as much as monetary uncertainty.
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