BTC Slips to $94K on CPI Data Before Majors Rally Back
Bitcoin dropped to $94K after CPI data but rebounded as Powell's crypto speech boosted market sentiment. Options volatility remains low.
- Bitcoin briefly dropped to $94K after CPI data but recovered.
- Powell’s speech and other factors helped major cryptos rally.
- Options market expects lower volatility, with short-term IV at 46%.
Bitcoin Dips to $94K Before Majors Rebound
Bitcoin faced a sharp drop to $94,000 after the latest CPI data exceeded expectations, causing initial market panic. However, major cryptocurrencies quickly rebounded, with Bitcoin and altcoins returning to their weekly highs. The recovery was largely fueled by Federal Reserve Chairman Jerome Powell’s positive remarks on crypto, which restored confidence among investors.
The market’s resilience showcased its ability to absorb macroeconomic shocks and adjust accordingly. Despite the initial slump, Bitcoin’s swift bounce suggests underlying bullish sentiment remains strong.
Options Market Signals Lower Volatility
In the options market, implied volatility (IV) has reached its lowest levels in almost a year. The Deribit Volatility Index (Dvol) has only been lower 14% of the time in the past 12 months. Short-term IV is especially low, with the current month’s expiry IV sitting at just 46%—a clear sign that traders anticipate reduced price swings in the near future.
This decline in IV suggests that bullish forces are losing momentum, at least for now. Additionally, large whale investors continue selling Block calls, adding further pressure on the market. Since the end of last month’s delivery, term skew has been trending downward and is now hovering near the zero axis, indicating a more neutral sentiment.
Whales Selling Options as Market Digests
“Trump Trade” With the market still digesting the impact of the so-called “Trump Trade,” many large investors are positioning themselves cautiously. The selling of options by major whales signals a shift in sentiment, with traders opting for a more defensive stance.
As Bitcoin and other cryptocurrencies navigate macroeconomic influences, traders will closely monitor the Fed’s stance and other key economic indicators. For now, the options market’s subdued volatility suggests that dramatic price movements may be limited in the short term.
