The crypto market was mixed ahead of the Federal Reserve’s interest rate decision on Wednesday. The CoinDesk 20 Index has added 0.41% since midnight UTC, with 10 members up and 10 down.
Bitcoin the largest cryptocurrency, added 0.75% to recoup some of Tuesday’s losses after a volatile 48 hours that saw it rise to $66,700 last week before crashing to $62,400 following the rout in South Korean stocks.
Inflation at 4.1% justifies the Fed raising the target federal funds rate for the first time in three years. On the other hand, a pause in hostilities between Iran and the United States eased some pressure on oil prices and slightly reduced the chances of a rise.
Ether (ETH) is down 0.13% on the day. Futures on the S&P 500 and Nasdaq 100 indexes are both positive, while gold holds above $4,000 and silver gained 1.40%, suggesting markets are hedging rather than engaging ahead of the announcement.
Positioning of derivative products
- Stable positioning before the Fed meeting: Crypto takers’ long-to-short volume ratio is near perfect ahead of the Fed meeting. Open interest (OI) remained steady at nearly $113 billion over the past 24 hours, while volume increased 10% to $205 billion. Taken together, the numbers indicate stable positioning but slightly higher churn.
- One-time gains have yet to increase futures participation: BTC and ETH spot prices increased by more than 1% in 24 hours, but these movements have not yet translated into increased participation in futures contracts. BTC OI remains stable at almost 750,000 BTC. ETH fell for a fourth consecutive day to 14.14 million ETH.
- UNI is an exception: Most of the top 20 tokens saw OI hold or fall over 24 hours. UNI is an exception, with OI up slightly to 68.53 million tokens, the most since July 13. This validates the 5% rise in the token’s price following BlackRock’s decision to bring its tokenized Treasury fund to the decentralized exchange.
- Mixed signals from RO-adjusted CVD: The 24-hour OI-adjusted CVD paints a mixed picture. This is positive for tokens such as ADA, TRX, XRP, CC, UNI and ETH, a sign that more traders are opting for market orders rather than passive limit orders. Other pieces display the opposite dynamic.
- Implied volatility remains near recent lows: The 30-day implied volatility indices for Bitcoin and Ether remain near their recent lows, a sign that traders are not expecting any near-term nervousness. It also contradicts the analyst community’s unease that traders still assign a 35% chance that the Fed will raise rates on Wednesday. This is unusual as markets typically reach consensus on what the Fed will do before making its decision.
- Puts dominate BTC options volume: In the options listed by Deribit, BTC places strike prices of $62,000, $60,000 and $54,000 which dominate the 24-hour volume leaderboard. A put option provides insurance against declines in the price of the underlying asset. In the case of ETH, calls are at the top of the list.
Symbolic discussion
- XRP led the altcoin’s gains on Wednesday, rising 1.72% to $1.086, with up 1.48%. Both continue to recover from their July lows as major cryptocurrencies consolidate.
- Jupiter (JUP) was the best 24-hour performer among DeFi coins, rising 5.79% as trading volume increased, extending a rally that has now seen it rise in three of the last four days.
- FET continued its decline, falling 4.60% since midnight and 6.78% over 24 hours. The AI token is now down nearly 14% over the past week, as the sector’s momentum in early July continues to slow.
- fell 5.14%, giving back most of last week’s speculative gains as retail enthusiasm fades.
- Monero (XMR) bucked the trend with a 1.82% gain to $347, quietly extending a streak of private coin sector outperformance that has gone largely unnoticed amid the broader market turmoil.
