Bitcoin is trading slightly lower at $93,931, with a broader cautious market tone as investors await comments from the Federal Reserve. Despite recent declines, Bitcoin is up 14.14% over the past month amid institutional interest. Traders are seeking downside protections via options ahead of potential Fed decisions, while there are renewed hesitations over stablecoin legislation due to political factors. Net inflows into Bitcoin ETFs suggest continued institutional appetite, adding to the cryptocurrency’s perceived role as a hedge.
Bitcoin’s price is holding firm near $94,000, although it’s dipped slightly on Tuesday, down by 0.6% to $93,931. Over the past week, the leading cryptocurrency has seen a small decline of 1%. However, on the brighter side, it has gained 14.14% in the last month, largely driven by institutional inflows and a stable demand for safe-haven assets amid ongoing macroeconomic uncertainties.
Despite the recent gains, trading activity on Tuesday suggests a more cautious market sentiment. Investors seem to be bracing for insights from Federal Reserve Chair Jerome Powell following the FOMC meeting on Wednesday. Analysis from the options market indicates that traders are looking for downside protection, albeit without a sense of panic.
Luuk Strijers, CEO of the crypto options exchange Deribit, shared with CoinDesk that there exist certain signs of demand for protective Bitcoin puts. He mentioned that this reflects a degree of caution among savvy traders, noting, “It’s nuanced.” He also pointed out that implied volatility continues to remain low. As of now, Bitcoin has retraced to about $94K, with Deribit’s DVOL, their measure of implied volatility, resting at 45, a level not seen since June last year.
In contrast, traders on decentralized platforms like Derive.XYZ appear more risk-averse, showing interest in put options at $82K, $78K, and $76K. Dr. Sean Dawson from Derive.XYZ told CoinDesk that these trends signal “evidence of downside protection,” particularly in light of the upcoming Fed meeting.
The Federal Reserve is anticipated to maintain interest rates at a steady 4.25%-4.50%. However, the market will keenly observe any hints of future rate adjustments. The recent robust jobs report has dimmed prospects for a rate cut in June, reducing the probability to 30%.
If Powell leans against easing, implying a continued hawkish approach prompted by inflation or trade concerns, this could exert pressure on risk assets like Bitcoin. Furthermore, legislative uncertainties loom large as Senate Democrats have expressed reservations about advancing stablecoin bills. This hesitance stems from President Trump’s increasing involvement in crypto-related ventures—a situation that complicates consensus across party lines.
On a positive note, Bitcoin ETFs have recorded net inflows for three consecutive days, indicating a steady appetite from long-term institutional investors. U.S. Treasury Secretary Scott Bessent recently commented that American interest rates now mirror sovereign credit risks, pushing the narrative that cryptocurrencies, particularly Bitcoin, might serve as a hedge against political instability, as much as they do against economic uncertainty.
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