According to TechFlow, on September 19, QCP Capital's latest analysis pointed out that the Federal Reserve announced a 50 basis point interest rate cut last night and plans to cut interest rates twice more this year and four times in 2025. With Fed Chairman Powell vague about the scale and pace of subsequent interest rate cuts, the market will pay close attention to the upcoming labor data for guidance.
The yield spread between 2-year and 10-year U.S. Treasury bonds, a measure of recession, has been inverted since July 2022, but has recently steepened to positive 8 basis points. This reflects market optimism and a shift toward risky assets. In the options market, implied volatility fell sharply after the FOMC meeting, with Bitcoin volatility falling by 19 percentage points and Ethereum falling by 18 percentage points. After the meeting, Bitcoin rebounded from $59,000 to $62,000, while Ethereum traded around $2,400.
QCP Capital believes that there is an opportunity to buy upside exposure given the decline in implied volatility. They expect market volatility to rise as we approach Election Day (just after the next FOMC meeting). The decline in implied volatility makes option pricing more attractive, and the upcoming US election could be a significant catalyst for the cryptocurrency market.
