Bearish expectations for Bitcoin (BTC) and Ethereum (ETH) have significantly weakened according to the latest options market data, with the decline in downside fears largely attributed to the upcoming Federal Reserve interest rate decision on September 17. Options market data shows a notable recovery in call/put curves, indicating reduced concerns about price declines.
The seven-day call/put skew for Bitcoin has recovered to nearly zero from a bearish -4% just a week ago, according to Amberdata. Both 30- and 60-day option skews, while still slightly negative, have rebounded from last week's lows. Ethereum's options skew exhibits a similar pattern, signaling a substantial easing of downside fears across major cryptocurrencies.
Analysts emphasize that the pace of the next upward move in BTC, ETH, and altcoins will largely depend on the magnitude of the Fed's expected rate cut. According to CME data, investors are pricing in over a 90% probability that the Fed will cut interest rates by 25 basis points to a range of 4%-4.25%, though a massive 50 basis point move remains possible.
Greg Magadini, Director of Derivatives at Amberdata, told CoinDesk that 'a surprise 50 basis point rate cut would be a massive +gamma BUY signal for Bitcoin, Ethereum, and Solana (SOL)'. He noted that Deribit-listed SOL options already exhibit strong bullish sentiment, with calls trading at a 4-5 volatility premium over puts.
Magadini added that if the Fed delivers the expected 25 basis point cut, a calm 'grind higher' for Bitcoin is likely to continue. For Ethereum, he suggested it may take up to another week to retest all-time highs and convincingly trade above $5,000.
Both BTC and ETH have seen renewed price strength in the lead-up to the Fed decision, with Bitcoin gaining over 4% to over $116,000 and Ethereum rising nearly 8% to $4,650 in the past seven days.