BTC options traders remain wary of downside risk, analysis shows

Investor sentiment in the Bitcoin options market is unstable, with traders remaining cautious about downside risk, according to on-chain analytics firm Glassnode. The firm explained that implied volatility (IV) across all maturities is gradually contracting, indicating a slowdown in demand for hedges against sharp price movements. While short-term volatility still reacts to spot prices, it is being suppressed by sell-offs during rallies. Glassnode noted that skew, the difference in IV between call and put options, is sending mixed signals. The 25-delta skew still favors put options, which are bets on a price decline, but short-term skew is neutral, and long-term skew is tilted toward the upside. This suggests a growing demand for bullish bets over simple downside hedging. The firm also observed trend-following behavior, with a concentration of call option purchases when BTC surpassed $95,000. However, Glassnode concluded that overall sentiment remains fragile, as traders are reluctant to sell put options, showing that caution about downside risk persists despite recent price increases.