My understanding is that it would be the first one. But, as @Ingenieur says, words are essentially meaningless in queer theory, so who the fuck knows?
Are butch lesbians in danger of being told they have to identify as straight men, because their gender is male (if gender runs on a spectrum from barbie to gi joe).
In a nutshell, yes. Someone from the trans lobby would say, "No, of course not, only the individual can say whether they are a butch lesbian or a trans man," but those same individuals are the ones encouraging butch teenage lesbians that they are, in fact, boys and need to transition, and they are also the same ones who are rewriting history so that any butch lesbian who isn't alive any more is recategorised as a trans man.
There have never been any butch lesbians throughout the whole of human history, apparently; they were all actually men. Who knew?