Savvy traders in Bitcoin (BTC) and Ether (ETH) are tightening their risk management strategies, signaling caution even as broader market sentiment remains bullish heading into summer.

This caution is reflected in an options strategy known as the 25-delta risk reversal, which involves buying put options while selling calls—or vice versa—to express a directional view or hedge exposure. Data from Deribit shows that risk reversals in both BTC and ETH are leaning bearish for the upcoming months, suggesting traders are bracing for potential downside volatility.

For Bitcoin, 25-delta risk reversals for June, July, and August tenors remain negative, indicating higher demand for put options, which protect against price declines, over call options. Similarly, for Ether, puts have become pricier through the end of July, highlighting traders’ defensive stance.

Traders typically use put options to hedge their spot and futures holdings, safeguarding portfolios against sharp market corrections.

“Risk reversals in both BTC and ETH continue to show a preference for downside protection across June and September tenors. This suggests that long holders are actively hedging spot exposure and preparing for potential drawdowns,” wrote Singapore-based QCP Capital in a market note.

The cautious mood extends to over-the-counter (OTC) markets. On liquidity platform Paradigm, the top five BTC trades last week included a put spread and a bearish risk reversal. For ETH, notable activity included a long position in the $2,450 put alongside a short strangle—a volatility-driven strategy.

Meanwhile, Bitcoin, the world’s largest cryptocurrency by market capitalization, has spent over 40 days fluctuating above the $100,000 mark, per CoinDesk data. Analysts suggest that profit-taking from long-term holders and continued miner selling have neutralized bullish momentum from strong spot ETF inflows, leaving BTC price action largely directionless.

“Bitcoin has recently tracked sideways, suggesting its current price may be too high for many retail investors. Open interest in BTC options has risen, with a positive and rising 25-delta put-call skew on 30-day contracts, which may imply that market participants are seeking short-term protection through put options,” noted Coinbase Institutional in its weekly report.

Adding to the cautious sentiment, Bitcoin closed below its 50-day simple moving average (SMA) on Friday for the first time since mid-April, potentially opening the door to further chart-driven selling and a drop below the psychologically important $100,000 level.

Despite the bearish signals, not all market observers are convinced a major correction is imminent. Cas Abbé, a prominent market analyst, pointed to Bitcoin’s on-balance volume metrics, which continue to reflect strong buying pressure. Abbé believes BTC prices could rally toward $130,000–$135,000 by the end of the third quarter.

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