BTC Stable as Fed Cut Priced In, Spot Demand Fuels Long-Term Bull

The cryptocurrency market is currently navigating a period of nuanced sentiment, marked by significant weekly options expiries and underlying macroeconomic developments that are shaping future volatility expectations. This intricate interplay between derivatives activity and anticipated Federal Reserve policy decisions is defining immediate price trajectories for cornerstone assets like Bitcoin (BTC) and Ethereum (ETH), even as the market shows signs of both caution and enduring strength.

A recent Deribit options expiry saw a substantial $3.4 billion in open interest conclude, signaling a slightly bearish tilt among market participants. The Bitcoin put/call ratio notably expanded to 1.3, indicating a more pronounced negative sentiment compared to previous weeks. While such expiries typically generate increased short-term volatility, the current event suggests a relatively subdued market outlook. Looking further ahead, approximately $17.7 billion in options are slated to expire by the end of the month, with a distinct predominance of call options.

Despite the impending Federal Reserve interest rate decision, which is widely anticipated to involve a 25-basis-point rate cut, implied volatility in the options market has remained remarkably stable, even registering a slight decline. This suggests that the market has largely priced in the Fed’s expected move, thereby dampening expectations for sudden price swings or unexpected rallies. As observed by Greeks.live, “The options market is pricing in relatively low future volatility, with a consensus that a 25-basis-point rate…” https://twitter.com/GreeksLive/status/1701297042079089906

Market Dynamics and Altcoin Performance

While Bitcoin’s dominance has experienced a slight reduction, sliding to 55.9% as altcoins witness notable rallies, both BTC and ETH continue to demonstrate underlying resilience. Prior to the recent options expiry, BTC traded around $115,400, with ETH holding firm at approximately $4,549.37. The performance of the broader altcoin market, despite its more dramatic price swings, largely remains contingent on the sustained strength of these foundational crypto assets.

Aggregate open interest for BTC across all crypto exchanges stands robustly above $41 billion, while ETH open interest has recovered to exceed $29 billion. On specific platforms like Hyperliquid, BTC open interest reached $3.9 billion, and ETH touched $2.9 billion. Derivative trading currently indicates that Bitcoin is likely to remain within a narrow band, with potential price movements largely constrained between $111,000 and $116,000. While significant short interest extends to $120,000, the bulk of positions at lower ranges makes a short squeeze to that level less probable.

Conversely, a downside movement toward $111,000 could challenge over $75 billion in long positions, potentially triggering liquidations. Recent market activity saw over $82 million in BTC short liquidations and $92 million in ETH liquidations, signaling residual market exuberance. Entering what is historically a slower month after a period of record prices, discerning whales are observed taking profits and strategically re-allocating capital.

Long-Term Outlook and Spot Demand

Despite short-term fluctuations and the potential for liquidations, the underlying Bitcoin bull market is widely considered to be intact, supported by positive macroeconomic conditions. Market volatility has approached an all-time low of 1.12%, significantly mitigating the risk of cascading capitulation events. Concurrently, demand for spot BTC has reached an unprecedented peak, with increasing volumes moving into corporate treasuries. This trend indicates strong institutional conviction and a reduced available supply, reinforcing a robust long-term outlook for the asset.