The emergence of BTC’s inverse head-and-shoulders pattern indicates a robust upward trajectory. In a notable development, the cryptocurrency market is exhibiting signs of caution, as evidenced by the 25-delta risk reversals on bitcoin and ether options trading in negative territory. This trend indicates a prevailing bias towards downside protection in anticipation of upcoming U.S. inflation data. Short and near-dated puts for BTC and ETH are currently more valued than calls, indicating a heightened demand for hedging against potential declines.
Imran Lakha indicates that the prevailing put bias in BTC is probably a result of institutions implementing long-term hedging strategies. According to data, negative risk reversals are holding steady as we approach the December expiry, while trading activity on the over-the-counter platform Paradigm is showing a continued decline. “Flows once more highlighted the [ETH] 26 Sep 4k put, elevated to 73v,” reported. However, there’s an unexpected turn of events. The daily chart for the S&P 500 E-Mini futures reveals a bearish trend, suggesting a possible sell-off that may impact the digital currency market and put hopeful bitcoin traders in a vulnerable situation. The E-mini futures have surged almost 5%, reaching a record high of $6,542 since August 1. The consistent upward movement has resulted in a rising wedge pattern, characterized by converging trendlines that link the highs and lows from July 31 and August 15, as well as the peaks reached on August 1 and August 22. The converging trendlines suggest a diminishing upward momentum, heightening the chances of a market pullback.
Google Gemini stated: “The emergence of a rising wedge, recognized as a bearish reversal pattern, following a prolonged surge to peak levels, notably heightens the likelihood of a sudden downward shift.” This indicates that buyers are facing fatigue and that the bullish momentum is starting to fade. The trend indicates a significant transformation instead of just a minor pullback. Digital currencies often reflect the mood of WS, indicating that a drop in the S&P 500 could significantly impact bitcoin. The likelihood of a downturn in the S&P 500 may increase significantly if Thursday’s U.S. Consumer Price Index surpasses forecasts. The median estimate for the CPI in August 2025 indicates a 2.9% year-over-year increase, marking the most significant annual rise since January 2025, significantly surpassing the Fed’s 2% target. The core CPI is anticipated to be 3.1% year-over-year. If confirmed, this could reignite concerns over stagflation – a worrisome scenario for risk assets like BTC. Bitcoin’s technical indicators point towards a bullish continuation; however, signals for downside protection from the options market, suggest potential risks ahead. XRP, meanwhile, exhibits a sense of ambiguity as it navigates within a descending triangle and the Ichimoku cloud, indicating both stabilization and uncertainty in its price action.
A breakout might trigger buying activity, yet the descending trendline underscores the growing strength of sellers. DOGE has reclaimed its bullish trendline from the June lows, surpassing the Ichimoku cloud and potentially gearing up for a retest of its July peak at 28.76 cents -however, market participants should exercise caution. Ultimately, bitcoin’s trajectory is closely linked to institutional hedging strategies. The S&P 500’s rising wedge breakdown may serve as a catalyst that curtails upside momentum, impacting not just BTC but the entire crypto market as well.