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Amid growing geopolitical tension and economic uncertainty, traders are increasingly hedging against a potential downturn in the Bitcoin (BTC) price, particularly concerning the psychological threshold of $100,000.
According to a recent report by Fortune, the put-to-call volume ratio on the crypto derivatives exchange Deribit has surged to 2.17 over the past 24 hours, indicating a strong inclination towards protective strategies as market sentiment shifts.
$100,000 Level Draws Increased Hedging Activity
Put options, which provide investors with the right to sell assets at a specified price, have seen heightened demand, especially for contracts set to expire soon.
Notably, open interest in put options with a strike price of $100,000 has now become the most significant on the exchange for Bitcoin investors, reflecting a put-to-call ratio of 1.16.
The cautious sentiment among traders coincides with the Federal Reserve’s (Fed) ongoing navigation of a complex economic landscape.
Geopolitical unrest in the Middle East between Israel and Iran, and fluctuating energy prices have contributed to inflation concerns and labor market risks tied to the tariff policies of the Trump administration.
As US officials are widely expected to maintain their current policy stance during an upcoming meeting, market attention will likely shift to the Fed’s latest forecasts regarding growth, unemployment, and interest rates.
Heightened Demand For Bitcoin
Javier Rodriguez-Alarcón, chief investment officer of XBTO, highlighted the potential consequences of the Fed’s signals. In a recent note, he stated, “A hawkish signal from the Federal Reserve could strengthen the US dollar and trigger a test of the psychological $100,000 mark.”
He also noted that the geopolitical landscape remains unpredictable; any credible de-escalation in the Middle East could act as a significant catalyst for risk assets like Bitcoin, while further deterioration could lead to additional downward pressure across markets.
Bitcoin recently reached an all-time high of $111,980 on May 22 and has since experienced a more than 50% increase following the election of Donald Trump as president for a second term.
However, as of this writing, the market’s leading crypto trades at around $102,948, representing a drop of nearly 9% after a recent failed attempt to consolidate above the $110,000 level and enter a new price discovery phase.
Geopolitical tensions have further impacted BTC’s performance in longer periods as well, with the monthly time frame showcasing a drop of little over 8% for the cryptocurrency, according to CoinGecko data.
Featured image from DALL-E, chart from TradingView.com
