What's Next for Bitcoin and Ether as Downside Fears Ease Ahead of Fed Rate Cut?

Fears of a downside for bitcoin (BTC) and ether (ETH) person eased substantially, according to the latest options marketplace data. However, the gait of the adjacent upward determination successful these cryptocurrencies volition mostly hinge connected the magnitude of the anticipated Fed complaint chopped scheduled for Sept. 17.

BTC's seven-day call/put skew, which measures however implied volatility is distributed crossed calls versus puts expiring successful a week, has recovered to astir zero from the bearish 4% a week ago, according to information root Amberdata.

The 30- and 60-day enactment skews, though inactive somewhat negative, person rebounded from past week’s lows, signaling a notable easing of downside fears. Ether’s options skew is exhibiting a akin signifier astatine the clip of writing.

The skew shows the market's directional bias, oregon the grade to which traders are much acrophobic astir prices rising oregon falling. A affirmative skew suggests a bias towards calls oregon bullish enactment plays, portion a antagonistic speechmaking indicates comparatively higher request for enactment options oregon downside protection.

The reset successful options comes arsenic bitcoin and ether prices spot a renewed upswing successful the lead-up to Wednesday's Fed complaint decision, wherever the cardinal slope is wide expected to chopped rates and laic the groundwork for further easing implicit the coming months. BTC has gained implicit 4% to implicit $116,000 successful 7 days, with ether rising astir 8% to $4,650, according to CoinDesk data.

What happens adjacent mostly depends connected the size of the impending Fed complaint cut. According to CME's Fed funds futures, traders person priced successful implicit 90% probability that the cardinal slope volition chopped rates by 25 ground points (bps) to 4%-4.25%. But determination is besides a flimsy anticipation of a jumbo 50 bps move.

BTC could spell berserk successful lawsuit the Fed delivers the astonishment 50 bps move.

"A astonishment 50 bps complaint chopped would beryllium a monolithic +gamma BUY awesome for ETH, SOL and BTC," Greg Magadini, manager of derivatives astatine Amberdata, said successful an email. "Gold volition spell perfectly nuts arsenic well."

Note that the Deribit-listed SOL options already grounds a beardown bullish sentiment, with calls trading astatine 4-5 volatility premium to puts.

Magadini explained that if the determination comes successful enactment with expectations for a 25 bps cut, past a continued calm "grind higher" for BTC looks likely. ETH, meanwhile, whitethorn instrumentality different week oregon truthful to retest all-time highs and convincingly commercialized supra $5,000, helium added.