As the summer trading season heats up, a notable divergence is emerging in the cryptocurrency market. While long-term sentiment remains staunchly bullish, sophisticated traders of Bitcoin (BTC) and Ether (ETH) are increasingly taking defensive postures, anticipating potential short-term volatility and price drawdowns. This cautious approach is most evident in the options market, where key indicators signal a growing demand for downside protection. The 25-delta risk reversal, a metric that compares the implied volatility of out-of-the-money puts and calls, has turned negative for BTC and ETH across summer contract tenors, indicating that put options, which hedge against price drops, are commanding a premium over call options.

Options Market Signals Caution for BTC and ETH

According to data source Amberdata, Bitcoin's 25-delta risk reversals for expirations in June, July, and August are all in negative territory. For Ether, puts are priced higher than calls for contracts ending out to July. This market dynamic suggests that traders who hold long positions in the spot or futures markets are actively buying insurance against a potential summer slump. Singapore-based QCP Capital noted in a recent market update that this trend reflects long holders hedging their spot exposure. This defensive positioning is further corroborated by activity on the over-the-counter liquidity platform Paradigm, where a significant portion of the top BTC trades for the week included bearish strategies like put spreads and risk reversals.

Bitcoin's Technicals and On-Chain Picture

Bitcoin's price action has been largely directionless for over 40 days, struggling to find a clear trend despite strong inflows into spot ETFs. This sideways consolidation suggests a market in equilibrium, where bullish ETF demand is being offset by profit-taking from long-term holders and selling pressure from miners. Recently, BTC closed below its 50-day simple moving average (SMA) for the first time since mid-April, a technical signal that could invite further chart-driven selling and potentially push prices lower. A weekly report from Coinbase Institutional highlighted this sentiment, noting that rising open interest in BTC options coupled with a positive put-call skew on 30-day contracts implies market participants are seeking short-term protection. Despite these bearish signals, some analysts remain optimistic. Market observer Cas Abbé pointed to Bitcoin's on-balance volume, which continues to show strong buying pressure, suggesting a potential rally towards the $130,000 to $135,000 range by the end of the third quarter.

Institutional Adoption and Macro Factors in Focus

The undercurrent of long-term optimism is fueled by persistent institutional adoption. Tokyo-listed firm Metaplanet recently announced the purchase of an additional 1,111 BTC, bringing its total holdings to over 11,000 BTC. Similarly, real estate investment firm Cardone Capital, led by CEO Grant Cardone, disclosed it has added approximately 1,000 BTC to its balance sheet. Valentine Fournier, an analyst at BRN, stated that despite short-term volatility, long-term structural demand is strengthening, with public entities and corporations solidifying Bitcoin's role as a strategic reserve asset. However, the immediate future remains tethered to macroeconomic developments. Traders are closely watching for Federal Reserve Chairman Jerome Powell's upcoming monetary policy testimony and the release of core PCE data, as these events could significantly influence market direction. Mean Theodorou, co-founder of Coinstash, cautioned that volatility could persist as geopolitical headlines and macro conditions remain dominant market drivers, leading to broad de-risking that has recently impacted altcoins like DOGE, ADA, and SOL.