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Bitcoin has spent the past several days struggling to decisively break past $80,000, and options traders don’t appear too concerned about an imminent volatility explosion despite the major economic events in the next ten days.<\/p>\n
QCP Capital’s latest market analysis suggests that BTC’s 18-day at-the-money implied volatility currently sits at just 37%-38%, despite the upcoming US inflation report and the subsequent FOMC meeting.<\/p>\n
The analysts believe<\/a> the volatility compression reflects a market waiting for additional information rather than traders expressing strong directional conviction. This narrative received some confirmation last week after the release of the August jobs report, which significantly exceeded<\/a> expectations, with the US economy adding 162,000 jobs compared to forecasts of around 55,000. Unemployment remained at 4.1% while average hourly earnings increased 0.3% MoM.<\/p>\n The reading strengthened the argument that the US remains resilient and shifted attention back toward inflation and the Fed’s next move. Markets now assign a 58% probability of a 25-basis-point rate hike at the September 15-16 meeting.<\/p>\n Major institutions have also turned hawkish, especially after Kevin Warsh’s speech<\/a> at the end of August. UBS expects the central bank to raise rates in September and also in December after previously forecasting no changes this year.<\/p>\n Aside from a brief retracement by a few grand, Bitcoin has remained<\/a> resilient, surging past $82,000 last week before it calmed at just under $80,000.<\/p>\n The next big test comes with the August inflation data, to be announced<\/a> during the current big economic week. Producer inflation will provide the first signal on Thursday, followed by the considerably more important Consumer Price Index on Friday.<\/p>\n The latter could materially alter expectations surrounding the upcoming Fed decision. As usual, a hotter-than-expected reading would provide the central bank more leeway for a rate hike, potentially pushing Treasury yields higher and creating additional pressure on risk assets like bitcoin.<\/p>\n The inflation threat has become particularly relevant as oil prices continue climbing amid renewed US-Iran strikes. Brent crude neared $100 per barrel on Monday, while markets are already assigning increasing probabilities to rate hikes from several major central banks.<\/p>\n A softer reading could reduce the pressure on policymakers to act and potentially provide BTC with the catalyst to finally break through $82,000. Nevertheless, QCP’s analysts do not expect a dramatic breakout in either direction.<\/p>\n The post Bitcoin Traders Are Surprisingly Calm Ahead of CPI and the Fed: Is a Big Move Coming?<\/a> appeared first on CryptoPotato<\/a>.<\/p>\n\nCPI Can Tilt the Market<\/h2>\n
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