The cryptocurrency market is exhibiting signs of increasing caution as traders await the release of crucial U.S. economic data this week. Both Bitcoin and Ethereum are experiencing a shift in options implied volatility, suggesting growing uncertainty ahead of the Federal Open Market Committee (FOMC) meeting minutes and Wednesday’s Core Personal Consumption Expenditures (PCE) inflation report.
Analysts at QCP Capital highlight a notable shift in Ethereum’s implied volatility, with a marked increase in put options over call options. This trend mirrors a similar sentiment in Bitcoin, indicating growing concerns about potential downside risks. Traders are seeking clarity from the FOMC minutes and the October PCE data, both of which are expected to significantly influence short-term market direction.
This cautious sentiment extends beyond the crypto market. Dow futures and S&P 500 futures are both down 0.02%, reflecting a broader market apprehension. Bitcoin’s price has dipped below the $93,000 mark, pausing its recent advance toward the psychologically significant $100,000 level. However, Valentin Fournier, an analyst at BRN, remains optimistic: “Despite this, fundamentals remain strong, and we expect accumulation around the $95,000 level before the next rally begins.”
Ethereum has experienced a more significant price correction, falling over 5% in the past 24 hours to trade around $3,300, according to The Block’s Price Page. Data from Deribit reveals a rise in the put-call ratio for Ethereum options to 0.74 for the end-of-November expiry, further underscoring the increasing caution among traders. QCP Capital analysts suggest this reflects a broader market sentiment as the year draws to a close without any immediate catalysts to propel prices higher. They add, “There are growing concerns about downside risks [that] may intensify, particularly with tonight’s FOMC minutes and Wednesday’s PCE data on the horizon.”
Key events this week include the release of the FOMC meeting minutes later today, providing insights into the Federal Reserve’s policy discussions and potential reactions to the recent presidential election results. Since the Federal Reserve’s November rate decision, which saw a 25 basis point reduction, Fed officials have expressed concerns about a potential slowdown in the progress of inflation reduction. The Core PCE inflation report for October, a key measure of inflation, will be released on Wednesday.
