Bitcoin options traders have been shedding their downside protection as the Federal Reserve meeting approaches this Wednesday. Data from Glassnode reveals that the put/call ratio on open interest plunged from around 0.76 in late June to roughly 0.52 recently, indicating a sharp decline in bearish hedging.
This shift means more traders are betting on Bitcoin’s price increase rather than guarding against drops. Large players are actively accumulating $70,000 strike calls and bull call spreads, signaling strong confidence in upward moves.
Unusual Volatility Patterns Before Key Event
One-week implied volatility currently stands at 34.3%, notably lower than the six-month implied volatility of 40.8%. This inverted volatility curve is unusual given the looming macroeconomic event, as markets usually brace for higher short-term swings ahead of Federal Reserve announcements.
Market participants are pricing in only about a 15% chance of a rate hike, which might be fueling this more relaxed attitude. However, the reduced demand for protective puts could also expose traders to unexpected downside risks if the Fed surprises the market.
The broader crypto ecosystem faces uncertainty as blockchain firms Movement Labs and Storj recently filed for bankruptcy, and exchanges BitMEX and BitMart announced shutdowns. Such developments add to the fragile sentiment despite bullish options positioning.
