Let's take a look at what happened in the first two weeks of September. Before reading this article, you can check out these two posts to see our expectations for September and how we positioned ourselves during important data releases like NFP.
Link to September Expectations
Link to NFP Data Position
Topics I'll cover in this article:
Information about interest rate decisions
Insights on possible scenarios
Bitcoin weekly and 2-week outlook
Ethereum weekly and 2-week outlook
Detailed technical data on BTC and ETH
Before we dive into the crypto side, let's briefly look at the markets and interest rate decisions. This week is all about interest rate decisions. While rate cuts are considered certain, the debate is about how many basis points it will be. Uncertainty has gripped all markets. BTC has been moving in the 50k-70k range for almost 7 months, and S&P has been fluctuating at ATH levels for 2 months.
The probability of a 50 basis point cut, which was 30% last week, rose to 52% towards the weekend. This triggered a general rise in the markets. However, there's currently a state of complete indecision in the market. Both 25 and 50 basis point cuts have their advantages and disadvantages.
Among the risks of a 50 basis point rate cut is the market's potential "Is there something we don't know, what's going on?" reaction, as well as the possibility of overheating the market, given that most markets are at ATH levels. On the flip side, there's a significant group that thinks the market will view this positively, seeing it as the Fed's potential to compensate for being late.
Those advocating for a 25 basis point cut argue that the Fed wouldn't want to give up its advantageous position by making a 50 point cut right off the bat, and wouldn't want to show their full hand just yet. They suggest that the Fed should keep a 50 point cut in reserve in case a faster rate cut becomes necessary. Additionally, there are expectations that, just as the rate hikes were patient and gradual, the cuts should be cautious and incremental. They support expectations of interest rates reaching 3% by the end of 2025, with 25 point cuts continuing.
Moreover, I think we shouldn't think one-dimensionally, considering potential events that could push the world into a downturn after the US Elections and with a new government in place, such as the Russia-Ukraine and Israel-Palestine conflicts, events severe enough to affect Iran's independence, tensions with China, oil prices, and many other factors.
In my opinion, the market is expecting an upward movement in the medium to long term, and if you're investing, it might be more sensible to position yourself in a way that allows you to play both sides or with inverse correlations. For example, if you're taking 3 bullish positions/assets, taking one that rises when these fall could balance your losses.
Bitcoin
The price is around the monthly opening and 8% above the weekly opening. The weekly implied volatility remained slightly below 12%. The price continues to progress within the range we determined after two weeks.
In general, the first two weeks of September weren't very active. BTC, which didn't make a new low, also got a nice reaction from the bottom area. It's moving around the critical threshold of 60k.
The weekly opening was positive in the Asian market, and if we don’t see a sharp sell-off in the US market, we can consider that the price is now looking for a turnaround and may rise.
Last week, when I wrote this, the BTC price went up 10%. Now there's been a slight decline with the Asian market opening. My expectation for this week will be entirely based on volatility. In a normal situation, I'd expect it to come to the 57-58k region and then move upwards, but due to volatile news, it might leave a wick lower or completely change direction downwards. However, my main thought is that the price will continue its upward movement after a distant correction.
Our implied volatility price range for this week is 52k-66.5k. $BTC DVOL is around 53%. I'm thinking of sharing a volatility position before the interest rate cut day, just like we did with the NFP news. We made a 4.5x profit on the NFP news position.
Ethereum
ETH, which is quite weak compared to BTC, closed 7% below the monthly opening but 1.5% above the weekly opening. The weekly implied volatility remained half as much below 15%. The price continues to progress within the range we determined after two weeks.
In general, the first two weeks of September weren't very active. Despite being very weak compared to BTC, it didn't make a new low. If it stays below 2300, which is seen as a critical threshold, it should be said that the market is expecting the 1900 and 2100 area.
ETHBTC has now broken the downward channel downwards. It also made its weekly opening there. This isn't a very good situation for the 0.038 region I'm expecting. I'm expecting a faster movement. However, altcoins have started to move more independently from $ETH which is still good news.
Details
A brief comparison of the second week's data compared to the first week of September
There's generally a decrease in volatility. However, open interest has increased slightly, even though we've only finished half of the week.
The Put/Call ratio decreased from 0.47 to 0.45 in ETH, and from 0.61 to 0.6 in BTC.
This shows that new positions are being opened on the Call side.
The max pain level in ETH has decreased from 2600 to 2500. In BTC, it's stable at 57,000.
The Funding Fee didn't change in ETH but has turned positive for BTC.
#FedRateDecisions #FedRateCut #FOMCForecast #Volatility #CryptoDecision
