Recently, an interesting change has emerged in the options market—traders are collectively changing their tune. Funds that were desperately betting on the Federal Reserve cutting interest rates are now shifting their stance, hedging a more aggressive scenario: that the Fed may keep rates unchanged throughout 2026.

This shift is not unfounded. Last Friday’s US employment data instantly woke up the market—unemployment unexpectedly fell, shattering many people’s hopes for a quick rate cut at the beginning of the year. Traders quickly re-evaluated, and the results were startling: the probability of a rate cut in January has basically dropped to zero, March is still very uncertain, and even June is becoming increasingly ambiguous.

Looking at the flow of options contracts, the main activity now focuses on the short and medium term. Traders are piling up positions in March and June options, betting that rate cuts will be repeatedly delayed. Meanwhile, institutional investors holding longer-dated contracts are betting even further ahead, directly speculating that interest rates will remain unchanged throughout 2026. Interestingly, whether these players genuinely believe the Fed will be so hawkish or not, the cost of these hedging positions is low and highly cost-effective, making them a standard risk management tool for large institutions.

The logic behind the market strategy is quite clear: since the Fed doesn’t seem eager to cut rates, preparations for a prolonged battle are necessary. The flow of SOFR options is already signaling a more hawkish stance, indicating that the market expects interest rates to stay high for the foreseeable future. Once this expectation is confirmed, valuations of stocks, bonds, and commodities will need to be reassessed. The previous trading logic of “betting on when the next rate cut will come” is quietly shifting, and now everyone is more concerned with “how to hedge against the risks of long-term rate stagnation.”

From the perspective of David Robin, a rate strategist at TJM Institutional Services, this shift is supported by data. He points out that from various economic indicators, the probability of the Fed maintaining rates until at least March has significantly increased. After each policy meeting, the likelihood of rates remaining stable is rising.

The key is that this subtle adjustment in the options market often serves as an early warning of a broader macro narrative shift. When traders use real funds to hedge scenarios like “the Fed will delay, slow down, or even keep rates unchanged throughout 2026,” it indicates a profound change in market sentiment. This also provides a clear signal for the crypto market—the entire risk asset revaluation cycle may just be beginning.