Recent options market data indicates that fears surrounding potential declines in Bitcoin (BTC) and Ethereum (ETH) have significantly diminished. Bitcoin’s current price hovers around $116,426.38, with its seven-day call/put skew—a metric indicating the distribution of implied volatility across options—having rebounded to nearly zero from a bearish 4% the previous week, as reported by data provider Amberdata.
This resurgence is complemented by a recovery in the 30- and 60-day option skews, although they remain slightly negative, reflecting a shift away from heightened downside concerns for both cryptocurrencies. The skews help illustrate the market’s sentiment, revealing traders’ preferences for call options—signifying a bullish outlook—over put options, which are utilized for downside protection.
As Bitcoin and Ethereum begin to experience a renewed surge ahead of the Federal Reserve’s rate decision scheduled for September 17, the focus is now on the anticipated magnitude of the rate cut. Bitcoin has surged over 4% in the past week, surpassing the $116,000 mark, while Ethereum has seen a nearly 8% increase, reaching approximately $4,650, according to CoinDesk data.
Current insights from CME’s Fed funds futures reveal that traders are signaling a greater than 90% likelihood of a 25 basis point cut, reducing the rate to a range of 4%-4.25%. However, there remains a slim chance of a more aggressive 50 basis point cut. The reaction to such a surprise cut could be significant, as noted by Greg Magadini, director of derivatives at Amberdata, who stated that a 50 basis point reduction would be viewed as a strong “+”gamma buy signal for Bitcoin, Ethereum, and Solana (SOL). Magadini emphasized that such a move could also stimulate substantial activity in gold markets.
In the context of Solana, the options trading on Deribit shows a pronounced bullish sentiment, indicated by call options trading at a 4-5 volatility premium over puts. If the Fed’s decision aligns with expectations for a 25 basis point cut, BTC is likely to experience a prolonged, steady ascent. Meanwhile, Ethereum may require some more time—potentially another week—to retest its all-time highs and establish a consistent trading position above $5,000.
