This Thursday before dawn, the United States will hold a new FOMC meeting, with the highly anticipated CPI inflation data set to be released on Wednesday evening. Global markets are on edge. According to “Fed Whisperer” Nick Timiraos, most mainstream economists and other professional Fed watchers now expect the Fed to cut interest rates once or twice in September or December. There are currently two risks: one is that the Fed may not consider robust economic activity as insufficiently tight policy, signaling that high interest rates may not be maintained for long enough; the other risk is that the Fed’s preemptive action may spark market turmoil.
In fact, the upcoming inflation data and the Fed’s interest rate outlook are crucial for BTC. The recent strong US economic data and the increasing negative correlation between Bitcoin and US bond yields give investors reason to be wary of potential increased volatility ahead of significant economic data releases. Over the past 24 hours, BTC briefly rose to the $70,000 mark before quickly dropping to a one-week low. This market movement is indeed concerning, despite a significant influx of funds into BTC spot ETFs last week, which may not provide enough confidence support for investors in the current “critical 36 hours.” Anand Gomes of Paradigm commented that the crypto market is like an addict, constantly needing positive news to sustain it, as “No news is bad news in crypto.”
In the options market, front-end IV has surged significantly amid uncertainty from US economic data and a market downturn due to Bitcoin sell-offs. There has been a large influx of bearish options buying for ETH across various June maturities, while the proportion of front-end bearish buying for BTC has also increased. However, at the same time, there has been a substantial increase in selling of bullish options with a strike price of $70,000 for end-of-June, resulting in a sharp simultaneous decline in front-end Vol Skew for both currencies.
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