Pivotal Moments for Bitcoin and Ethereum as Central Banks Announce Interest Rate Decisions
This week, major central banks such as the Bank of Japan and the US Federal Reserve (Fed) are set to announce their interest rate decisions, which could have a significant impact on the crypto market and the two largest cryptocurrencies, Bitcoin (BTC) and Ethereum (ETH). The announcements will set the tone for monetary policy in the coming months.
Bitcoin Price Expected to Fluctuate
According to a recent report by crypto futures exchange Blofin, traders are anticipating that Bitcoin’s price movement range will reach 9.78% over the next seven days, with a projected 30-day range of 20.33%. However, despite the expected volatility, traders remain bullish on BTC in the medium to long term.
- Price declines and pullbacks are expected to induce volatility, but the duration of this round of pullback is expected to be relatively short.
- Risk aversion to macro uncertainty is seen as the primary trigger for volatility.
- The latest dealers’ gamma distribution supports the expected wide range of BTC price fluctuations.
- On-chain data shows a decline in spot investors’ enthusiasm for buying BTC.
- The number of addresses holding more than 100 BTC continues to increase.
- The reduced number of addresses holding over 1,000 BTC suggests that significant holders have decided to sell at BTC’s new highs.
- The hedging effect contributes to the increasing possibility of BTC price stabilization.
Ethereum Faces Bearish Sentiment
Similar to Bitcoin, traders expect relatively high volatility levels for Ethereum in the short term, with projected price movement ranges of 10% over seven days and 20.32% over 30 days. However, the report suggests that traders are less optimistic about ETH’s future performance compared to Bitcoin.
- Bearish sentiment dominates the front-month options for Ethereum.
- Bullish sentiment remains favorable in the back-months.
- Expectations of rate cuts may support the ETH price.
- Pricing of Ethereum tail risk indicates increased pessimism regarding significant events impacting the ETH price.
- Spot Ethereum ETFs are seen as a potential trigger for price fluctuations.
Altcoin Leverage and Market Stability
The high leverage of altcoins has long been a source of risk in the cryptocurrency market. However, recent price declines have led to the liquidation of many highly leveraged altcoin positions, resulting in lower annualized funding rates for perpetual contracts. This deleveraging of altcoins, coupled with their relatively small market share, has helped to mitigate risk and contribute to market stability.
- Altcoin leverage has declined overall.
- Speculation in meme coins continues despite the decline in altcoin leverage.
Currently, Bitcoin is trading at $62,500, reflecting a significant decline of 7.5% within the last 24 hours. Similarly, Ethereum is trading at $3,276, experiencing a 6.8% drop during the same period.
Hot Take: Central Bank Decisions Could Shape Crypto Market
This week’s interest rate decisions by major central banks have the potential to shape the crypto market in the coming months. Traders are anticipating volatility in both Bitcoin and Ethereum prices in the short term but remain bullish on their long-term prospects. The decline in altcoin leverage and increased stability in the market provide some reassurance for investors. However, the outcome of these central bank decisions will ultimately determine the direction of the crypto market.
Sources: Blofin
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