Bitcoin and Ethereum Ahead of Fed Decision: Fear of Sell-Off Fades as Market Eyes Growth

Concerns that Bitcoin (BTC) could drop toward $116,425 and Ethereum (ETH) follow suit have eased significantly, according to the latest options market data. Yet the real question remains: how strongly the market will react to the Federal Reserve’s rate cut decision set for September 17.

Market Signals: Fear Is Fading The seven-day call/put volatility skew for BTC, which measures demand for bullish vs. bearish contracts, has recovered to nearly zero — after signaling bearish sentiment at 4% just a week ago. Similarly, the 30- and 60-day skew has bounced off last week’s lows. Ethereum shows the same pattern: traders are less concerned about downside risk and are beginning to bet on growth. Option skew indicates market bias: positive numbers show stronger demand for bullish (call) options, while negative figures suggest higher demand for downside protection (puts).

Fed to Decide: 25 bps or a Surprise 50 bps? All eyes are on Wednesday, when the Fed announces its move. BTC has gained over 4% in the past week to above $116,000, while ETH surged nearly 8% to $4,650 — but the next move will be dictated by central bank policy. According to CME FedWatch, there is more than a 90% probability of a 25 basis point cut to 4%–4.25%. Still, there is a slim chance the Fed could opt for a more aggressive 50 bps cut. And that could set off fireworks.

Explosion Scenario: 50 bps as the Trigger “A surprise 50 basis point cut would be a massive +gamma signal to BUY ETH, SOL, and BTC. Gold would absolutely go crazy too,” said Greg Magadini, director of derivatives at Amberdata. On Deribit, SOL options are already flashing bullish, with call contracts trading at a volatility premium of 4–5 points over puts.

Bitcoin Steady, Ethereum Waiting for Breakout If the Fed sticks to expectations with a 25 bps cut, Magadini believes Bitcoin will continue its steady climb. Ethereum, however, may need one to two more weeks to retest all-time highs and convincingly break above $5,000.

The fear of a sharp sell-off is fading, but anticipation ahead of Wednesday’s Fed decision is building. The market now waits to see whether a steady growth path will be confirmed — or if a surprise move could ignite the next crypto explosion.

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