Bitcoin (BTC) market flows report moderate risk aversion before the expected remarks of the president of the Federal Reserve (Fed) on a potential rate of June Wednesday.
“Although the federal reserve should largely have stable rates at this week’s meeting, we have only seen a nuanced request for BTC protection put, reflecting limited caution among sophisticated merchants,” said Luuk Strijers, CEO of the principal discourage of crypto options.
A sale option gives the buyer the right but not the obligation to sell the underlying asset at a predetermined price at the latest at a specific date. Consider it as insurance against price swoons. Traders generally buy sales options when you seek to take advantage of or protect the market positions from long points against market slowdowns.
Deribit is the world’s leading exchange of crypto options, recording billions of dollars in daily negotiation volume. On Deribit, an option contract represents a BTC.
Strjers explained that the wider option market has not shown a strong directional bias or a decisive inclination to downward coverage.
“The BTC spot has been at around $ 94,000, and the Dol of Deribit, our implicit volatility index is at 45 – the levels that we observed for the last time in June 2024. Overall, this suggests a feeling of moderate risk, but not yet a rush of protection focused on panic,” said Strijers.
Dex traders charges on puts
However, merchants operating on decentralized exchanges are drifting.
“There are evidence of downward protection because traders also buy out of $ 82,000, $ 78,000 and $ 76,000 strikes, probably due to concerns about the meeting of the Federal Reserve Board which could not lead to any rate reduction – or worse, increases,” said Dr. Sean Dawson, Research Manager at Coinsk Decentralized AI-POWERED platform.
Derive, formerly Lyra, is one of the main chain options platforms, representing more than 20% of the total chain activity of $ 1.38 billion in April, according to the Defillama data source.
On Wednesday, the Fed is likely to maintain the stable reference interest rate in the range of 4.25% to 4.50%. It is a conclusion.
At the same time, Powell is likely to maintain the broad position dependent on data at the press conference after the decision.
Focus on the discourse to reduce the rate of June
However, Powell could be asked about the prospects of a drop in rate in June and the economic uncertainty resulting from the recent trade war by President Donald Trump with China.
The anxiety of the dex traders probably comes from what Powell could say on the two questions.
Until last Friday, the release of the pay no longer warm than expected by the FARMs, the markets expected the Fed to lower the rates by a quarter of percentage in June. However, the solid job report has changed market expectations, traders now seeing only 30% chance of moving in June.
“Market players will closely monitor the FOMC meeting next week to see if the Fed provides a stronger signal that it plans to resume rate drops at the following FOMC meeting in June. After a solid not enlarged cup today, it is now more dependent on the economic analysis of the United States in the month in advance” “A note to customers on May 2.
Risk assets, including BTC, can undergo the pressure if Powell greatly repels the decrease in the rate of June, expressing fears of stagflation. A similar reaction can be observed if the evaluation of uncertainty in the policy statement is upgraded to reflect the developments of the trade war since April.
Bank of America (Bofa), however, expects Powell to keep the door open for a potential rate drop in June.
“Powell will probably be questioned about the prospects for a decrease in June. The bar for this seems high, since the 90 -chick break on reciprocal prices does not end before July. However, we do not think that Powell would like to exclude a decrease in June,” said the world Bofa research team in a note to customers on May 2.
“It is easier to simply indicate that the Fed is dependent on data and vigilant at the risk for its two terms, then let the data speak.”
