Tense Week For Cryptos: Between Inflation And Bitcoin Expiration!

In a context of bustling financial markets, where every macroeconomic event can redefine the balance, the upcoming week promises to be crucial for cryptocurrencies. Investors’ attention is focused on key indicators such as the PCE price index, the minutes of the Federal Reserve (FOMC), and the revision of the U.S. GDP. At the same time, the imminent expiration of more than $10 billion in Bitcoin and Ethereum options is set to add to the prevailing volatility. These dynamics, which blend economic uncertainty and crypto issues, could sustainably shape the financial landscape.

Economic Indicators Under Close Surveillance

The upcoming release of the FOMC minutes for November is attracting all the attention, particularly after recent signals of a possible easing of the 2% inflation target. These discussions, revealing of the future U.S. monetary policy, are seen as a potential pivot for financial markets. The Federal Reserve seems to be adjusting its priorities in response to current economic dynamics. Thus, the minutes, expected on Tuesday, November 26, 2024, could also shed light on the Fed’s stance on interest rates, an important factor for the liquidity of risk assets, including cryptocurrencies.

Besides the minutes, the PCE price index (Personal Consumption Expenditures) for October, expected this Wednesday, September 27, 2024, constitutes another focal point. Projected at 0.2% on a month-to-month basis and 2.3% on a year-to-year basis, this indicator will be closely watched to assess the progression of inflation. Core inflation figures, excluding energy and food, are expected to show an increase of 2.8%, which would signal slight upward pressure. These data, coupled with the revision of the U.S. GDP for the third quarter, also anticipated this Wednesday, will provide a global overview of the economic health of the United States. They will influence both investor sentiment and the valuation of cryptocurrencies.

Announced Volatility with the Expiration of Bitcoin and Ethereum Options

As markets digest economic data, an internal event in the crypto sector threatens to add a surge of volatility: the expiration of more than $10 billion in Bitcoin and Ethereum options. According to data from Deribit, $9.13 billion in Bitcoin options will expire on November 29, with a put/call ratio of 0.80. Ethereum options, amounting to $1.24 billion, show a similar dynamic with a put/call ratio of 0.77. These expirations, which set equilibrium prices (‘max pain’) at $77,000 for Bitcoin and $2,800 for Ethereum, illustrate the divergent positions in the market.

This phenomenon, recurring yet amplified in the current context, could provoke sudden movements, particularly a selloff. ‘We could witness a temporary correction, but the long-term trajectory remains promising,’ notes Peter Brandt, a key figure in Bitcoin trading. The coincidence with a recent rally of major assets, fueled by political events such as Donald Trump’s electoral victory, exacerbates short-term risks and reignites optimism about the future robustness of cryptocurrencies.

This conjunction of events, between macroeconomic data and crypto-specific dynamics, puts the markets to the test of increased volatility. The coming days will provide invaluable insights into the state of the U.S. economy. Moreover, they will test investors’ resilience against fluctuations induced by the expiration of options. As uncertainty persists, one thing is certain: cryptocurrencies remain at the center of attention, oscillating between catalysts for growth and barometers of risk appetite.