Fears of a downside for Bitcoin (BTC) and Ether (ETH) have undoubtedly been a hot topic recently, especially as the cryptocurrency market experiences fluctuations influenced by macroeconomic factors. According to the latest options market data, concerns regarding significant price declines have eased significantly. As of now, Bitcoin’s price stands at around $115,060.87, having gained over 4% in just a week, indicating a positive sentiment shift among traders.
The recent data from Amberdata highlights that Bitcoin’s seven-day call/put skew has recovered to nearly zero, rising from a bearish 4% just a week prior. This skew measures the distribution of implied volatility between calls and puts, providing insights into how traders view the market. A positive skew usually suggests that traders are leaning toward bullish options, while a negative reading reflects a higher demand for protective puts.
However, it’s not just Bitcoin experiencing a turnaround. Ether’s options skew is showing a similar recovery pattern. Both cryptocurrencies have been buoyed by a general upswing leading up to the Federal Reserve’s (Fed) critical rate decision expected on September 17. This crucial decision could further influence market behavior, and traders are closely monitoring developments.
The market’s reaction is particularly focused on the anticipated rate cut by the Fed, with traders pricing in a 90% probability for a 25 basis point (bps) cut to the range of 4%-4.25%. While this expectation is dominant, there’s a whisper of a potential surprise move—a 50 bps cut that could send markets, especially crypto, into a frenzy. The implications of such a surprise are immense, with many experts signaling that it would act as a significant bullish signal for Bitcoin, Ether, and other cryptocurrencies.
Greg Magadini, director of derivatives at Amberdata, emphasizes that a 50 bps cut would be a potent “gamma BUY signal” for BTC, ETH, and Solana (SOL), potentially elevating their prices sharply. “Gold will go absolutely nuts as well,” he adds, indicating the broad implications of high-impact monetary policy shifts.
On the flip side, if the Fed’s decision aligns with the widely expected 25 bps cut, Magadini anticipates a “calm grind higher” for Bitcoin, suggesting a more measured yet steady rise in prices. Ether might take slightly longer, possibly a week or more to retest its all-time highs above \( \$5,000 \).
In tandem with these developments, the sentiment in the options market for SOL indicates a robust bullish outlook, with calls trading at a premium over puts, reinforcing the overall optimistic market sentiment. This shift in trader sentiment reflects a broader belief that the commodities and equities markets will react favorably to potential easing from the Fed.
As the market prepares for the Fed’s announcement, many traders and investors are left contemplating the potential outcomes. The atmosphere is charged with anticipation, and regardless of which decision the Fed makes, the reaction from the cryptocurrency ecosystem is sure to be significant. Those involved in the market are reminded that in the world of crypto, volatility is often the norm rather than the exception.
