During this week’s FOMC meeting, the official statement and dot plot from the Fed have stirred a hawkish tone in the market. The forecast indicates only one rate cut in 2024, with year-end core PCE inflation expected to reach 2.8% (higher than the previous forecast of 2.6%). However, Powell, in a subsequent interview, shifted back to a dovish stance, highlighting that most officials did not factor in the lower-than-expected CPI data released just before the meeting. Traders are more focused on the positive implications of the CPI data rather than the FOMC statement, leading to the 10-year Treasury yields dropping to 4.20%, while the U.S. stock market hit new highs.
In the realm of cryptocurrencies, BTC briefly decoupled from macroeconomic conditions and U.S. bonds. ETFs saw significant outflows, with FBTC and GBTC experiencing outflows of $106.4 million and $61.5 million respectively, while ARKB under Ark lost $53 million. As of now, net outflows for the week have reached $564 million.
Renowned trader Peter Brandt also shared his insights on recent trends. He believes that if there is no short-term rebound, downward pressure on the price will persist. From a technical standpoint, if BTC falls below the $65,000 support level, it could potentially drop to $60,000 and even further to the low of $48,000. While BTC has struggled to challenge new highs for three consecutive months, and short-term bearish sentiment remains, Brandt still sees potential for an upward move ahead, emphasizing patterns like “Hump with a Slump then a Pump and a Dump” that often occur before bull markets.
In options trading, implied volatility spiked to intraday highs midday, with bullish volatility strategies like the 28 JUN 24 66000-68000 Long Strangle for BTC emerging. There was also substantial buying in Call/Put Outright positions for the 21 JUN 24 contracts. However, just before settlement, there was a sudden shift in sentiment, with IV rapidly giving back all its gains for the day. This period also saw significant Short Vol strategies for BTC on the 21 JUN 24 contracts and a large selling of bullish options flow for ETH, leading to an overall drop of around 1%.
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