Bitcoin Rally Faces Fed and Congress Tests Amid Bullish Sentiment
Bitcoin's recent rally has been met with skepticism by some market participants due to various headwinds, including Federal Reserve interest rate hikes and US Congress' crypto regulations. However, according to some investors, the digital asset has likely passed its worst point and is now showing signs of bullish sentiment.
The 25-delta skew indicator, which compares demand for call options to take positions on price increases with put options as protection against declines, entered positive territory in August, indicating that investors are willing to pay more for options that offer the opportunity to profit from bitcoin's rise. This change in sentiment was influenced by renewed investor interest in the crypto market after SpaceX's large IPO previously absorbed funds from the market.
Options traders have even placed positions targeting a price of $80,000 or more by December, with some predicting an 85% chance of an interest rate hike on Wednesday. However, Matthew Dibb, chief operating officer of Singapore-based crypto investment manager Stack Funds, believes that short-term traders now see inflation data and rate hikes as a short-term threat.
Jim Ferraioli, Head of Crypto Research at Charles Schwab, notes that one positive surprise could emerge if Fed Chair Kevin Warsh signals that an interest rate hike is a one-off and not the start of a new tightening cycle. However, Joseph Edwards, an independent financial researcher, believes that any form of interest rate hike is unlikely to be immediately viewed positively by bitcoin investors and other speculative assets.