Bitcoin Investors Brace for Volatility Ahead of FOMC Meeting
The United States recently released its Producer Price Index (PPI) inflation data for February, causing Bitcoin and the wider cryptocurrency market to experience a sell-off. As of now, Bitcoin is trading at a price of $68,195 with a market cap of $1.342 trillion, representing a 6.95% decrease.
Anticipating the FOMC Meeting
Traders are preparing for a potentially volatile weekend as they await the Federal Open Market Committee (FOMC) meeting scheduled for March 20. QCP Capital, a prominent trading firm, has reported an increase in perpetual swap open interest over the past 24 hours, indicating heightened activity in the market.
- Risk reversals for Bitcoin (BTC) and Ethereum (ETH) currently favor put options in the near term, suggesting cautious sentiment among investors.
- Despite this cautiousness, there is strong demand for year-end BTC call options with strike prices ranging from 100k to 150k, indicating bullish expectations for Bitcoin’s performance by the end of the year.
- There are speculations about a potential short-term market dip followed by a rally towards BTC reaching 150k by year-end.
- Perpetual funding rates and the forward curve remain high, leading QCP Capital to view spot-forward spreads as an attractive opportunity for a risk-free trade with potential gains of 20-30%.
Although short-term sell-offs may occur, analysts believe that these fluctuations will not have a lasting impact on the overall upward trend. The sustained demand for daily spot BTC ETFs indicates strong investor confidence. Traders are closely monitoring market developments leading up to the FOMC meeting, as it could further influence trading activity in the coming days.
Shifting Market Sentiment
Data from Greeks.Live suggests that the prevailing narrative regarding ETF inflows is undergoing a shift, as indicated by significant declines in implied volatility (IV) across all major terms in recent days. Additionally, a lack of clear direction in block options orders suggests a weakening market sentiment.
Market analysts have observed that the current sentiment resembles a cooling phase, which historically precedes the start of a bull market.
Furthermore, Bitcoin ETF daily inflows were at their lowest point in March on Thursday. According to data from SoSoValue, March 14 saw significant movements in Bitcoin spot ETFs, with notable inflows and outflows:
- Grayscale’s ETF GBTC experienced a substantial net outflow of $257 million within a single day.
- On the other hand, BlackRock’s IBIT ETF recorded a remarkable net inflow of $345 million and has seen historical net inflows reach $12.37 billion.
Hot Take: Brace for Volatility Ahead of FOMC Meeting
The release of PPI inflation data by the United States has caused a sell-off in Bitcoin and the broader cryptocurrency market. Traders are preparing for potential volatility leading up to the FOMC meeting on March 20. The prevailing sentiment suggests caution among investors, with risk reversals favoring put options in the near term. However, there is strong demand for year-end BTC call options, indicating bullish expectations for Bitcoin’s performance by the end of the year. While short-term sell-offs may occur, analysts believe they will not have a lasting impact on the overall upward trend. The market sentiment appears to be shifting towards a cooling phase, which historically precedes a bull market. Bitcoin ETF inflows were at their lowest in March, with significant movements observed in spot ETFs. Grayscale’s ETF GBTC experienced a net outflow of $257 million, while BlackRock’s IBIT ETF recorded a net inflow of $345 million. Investors should closely monitor market developments as they could further influence trading activity in the coming days.
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