What Lies Ahead for Bitcoin and Ether as Fed Rate Cut Eases Downside Concerns

Fears of a pullback for bitcoin (BTC) and ether (ETH) have eased sharply as markets anticipate the Federal Reserve’s rate decision on Sept. 17. Options market data indicate that the next upward moves in these cryptocurrencies will largely depend on the size of the expected rate cut.

BTC’s seven-day call/put skew, which tracks how implied volatility is distributed between calls and puts, has recovered to nearly zero from a bearish 4% last week, according to Amberdata. Longer-term skews for 30- and 60-day options, while still slightly negative, have also rebounded, signaling a reduction in downside concern. Ether’s options exhibit a similar trend.

The skew provides insight into market sentiment: a positive reading reflects bullish positioning, while a negative skew signals higher demand for puts or downside protection. The options reset coincides with renewed price gains—BTC has risen over 4% to $116,000 in the past week, and ETH is up nearly 8% to $4,650, according to CoinDesk.

CME Fed funds futures show traders pricing in over a 90% chance of a 25-basis-point cut to 4%-4.25%, with a small possibility of a surprise 50-bps move. Greg Magadini, director of derivatives at Amberdata, said a 50-bps cut would act as a “+gamma buy signal” for BTC, ETH, SOL, and gold, potentially triggering sharp rallies. SOL options on Deribit already indicate strong bullish sentiment, with calls trading at a 4–5 volatility premium over puts.

Magadini added that if the Fed delivers the expected 25-bps cut, BTC is likely to continue a steady upward grind, while ETH may take a week or more to retest all-time highs and surpass $5,000 convincingly.

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