Market Signals Hint at Bitcoin Correction as Fed’s Hawkish Stance Weighs on Sentiment
Bitcoin’s (BTC) march above $90,000 has hit turbulence, with options market trends showing warning signs of a potential price retreat. Patterns in Deribit-listed BTC options closely resemble those seen before the steep decline in Trump Media (DJT) shares, raising concerns among traders about a possible pullback.
The implied probability distribution—an options-based metric indicating traders’ views on future price movements—has shifted toward lower price levels for bitcoin, according to crypto analytics platform BloFin.
“Market participants are showing a stronger consensus around downside risk for BTC,” noted Griffin Ardern, BloFin’s head of options trading, in a Friday update. “This mirrors the setup seen with DJT shares before their sharp correction earlier this month, suggesting traders may view BTC’s current levels as overheated.”
DJT shares surged to $54 in October, buoyed by optimism about Donald Trump’s pro-crypto platform and his anticipated presidential victory. However, prices have since halved to $27, signaling a shift in market sentiment. Bitcoin, too, has seen a meteoric rise following Trump’s win, climbing to a high of $93,000 before retreating to $88,100 at press time.
Hawkish rhetoric from Federal Reserve Chair Jerome Powell has further pressured market sentiment. On Thursday, Powell emphasized a cautious approach to rate cuts, stating, “The economy’s strength allows us to proceed carefully, with no urgency to lower rates.” These comments dampened hopes for accelerated liquidity easing, a key driver of bitcoin’s recent rally.
Despite these concerns, the broader market retains a bullish stance on BTC. Many traders are positioning for further gains, anticipating a breakthrough above the $100,000 mark as optimism surrounding Trump’s crypto-friendly policies continues to bolster long-term sentiment.
“While near-term volatility is likely, bitcoin’s structural rally remains intact,” Ardern added. “We expect traders to continue buying the dips, especially as policy clarity from the new administration energy.
