Bitcoin is pricing in two Fed rate cuts for 2024
Quantitative trading firm Pythagoras forecasts that risk assets will price in two, not three, Fed rate cuts by 2024.
“Bitcoin showed strength in the face of an aggressive CPI report and strong inflation data, seeing only a pullback to $67,000 following the announcement of the Fed minutes,” Semir Gabeljic, head of Capital Formation at Pythagoras Investments, said in a note. of e-mail.
"[Still] The -2% drop from Monday's retest of $73,000 shows that risk assets, including BTC, are pricing in two rate cuts instead of three for the rest of 2024," he added.
Punters on decentralized prediction platform Polymarket appear to be evenly split on the number of rate cuts by the end of 2024.
Twenty-six percent of bettors have bet that there will be one cut, while 28% believe there will be two cuts and 21% bet that there will be no cut.
Meanwhile, Jun-Young Heo, a Singapore-based Presto derivatives trader, noted that the market recovered quickly after the announcement of the higher-than-expected CPI compared to gold or the S&P 500 index.
Implied volatility for options expiring on April 26 is still trading at a premium, while recent historical volatility is still trending lower, Heo noted.
Some market participants are noticing that bitcoin prices are reacting favorably to slower-than-usual outputs from the Grayscale Bitcoin Trust (GBTC).
On-chain data shows that GBTC outflows are at $18 million, which is the lowest since the launch of the US bitcoin ETFs.
“But we need to see a few more dates to know if GBTC outflows are becoming negligible as it has a higher fee than any other ETF,” Heo added.
