QCP Capital analysts noted that implied volatility is increasing in the options market as the weekend expiration approaches. The current put-call ratio is tilted in favor of put options, as Bitcoin’s spot price has remained relatively stable over the past 24 hours. This suggests a more cautious stance among traders.
“Market tensions are rising as we approach the first Fed rate cut of the cycle, the impact of unexpected macro data is amplified, and the likelihood of a 50bp cut has skyrocketed. This is reflected in the increase in volatility, with Bitcoin’s implied volatility up 8 points and Ether’s up 20 points on Friday,” the analysts said.
This week’s Bitfinex Alpha report also predicted that crypto market volatility will increase this week due to investor anticipation of a Fed rate cut. “We see significant potential for market volatility this week, driven by investor anticipation of the Fed’s decision to cut rates. Current market dynamics are largely driven by investor anticipation of an imminent rate cut, preparing for potential volatility,” the Bitfinex analyst said.
The report added that market reactions could vary significantly depending on the size of the rate cut. A 25 basis point cut could maintain a moderate risk-on environment, while a larger cut of 50 basis points could trigger stronger buying or, conversely, profit-taking among cautious investors. “This volatility is likely to be reflected in the spot Bitcoin ETF and the perpetual markets as a whole, with increased volatility as traders adjust their positions,” Bitfinex analysts noted.
Rate traders expect a 50 basis point cut.
Recent market data shows that expectations are growing for a 50 basis point rate cut at the upcoming Federal Open Market Committee meeting. According to the CME FedWatch tool, the probability of a 50 basis point cut has risen to 65%, compared to the 35% probability of a 25 basis point cut.
BRN analyst Valentin Fournier said that even if the Fed cuts rates by 50 basis points as expected, concerns about persistent inflation and recession risks could lead to a negative market reaction.. “Bitcoin Bitcoin
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‘The price has been volatile in recent weeks, and the upcoming Fed pivot is expected to amplify this volatility. Technical indicators suggest that Bitcoin’s recent rally momentum since the September 6 drop to $52,500 is weakening, increasing the likelihood of a trend reversal,” Fournier told The Block.
According to The Block’s Price Page, Bitcoin is up just 1% over the past 24 hours and was trading at $59,181 at 6:41 a.m. ET. Ether has been flat over the same period and is currently trading at around $2,300.
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