The U.S. is set to hold a new session of the FOMC meeting early Thursday morning. Prior to this, significant CPI inflation data will be released Wednesday night, leaving global markets on edge. According to Jinshi News, “Fed whisperer” Nick Timiraos notes that most buy-side economists and other professional Fed watchers now expect the Fed to cut interest rates once or twice either in September or December. There are two prevailing risks at this stage: one is that the Fed might view robust economic activity as a sign that the policy is not tight enough, suggesting that high interest rates have not been maintained long enough; the other risk is that the Fed’s preemptive action could ignite the market.

Source: SignalPlus, Economic Calendar

In fact, the upcoming inflation data and the Fed’s interest rate outlook are crucial for BTC. Recent strong U.S. economic data and the increasing negative correlation between Bitcoin and U.S. Treasury yields give investors reason to be wary of potential volatility increases before major economic announcements. Over the past 24 hours, BTC briefly rose to the $70,000 mark before experiencing a continuous decline to a weekly low. This situation is indeed concerning, despite large inflows into BTC spot ETFs last week, which did not provide sufficient confidence support for investors during the “critical 36 hours.” Anand Gomes of Paradigm commented that the crypto market is like an addict constantly in need of good news to sustain itself, noting, “No news is bad news in crypto.”

Source: TradingView

In terms of options, front-end IV has risen sharply amid uncertainty brought by U.S. economic data and Bitcoin’s decline due to selling pressures. In June, there has been a significant influx of bearish option positions in ETH, and a similar increase in bearish buys for BTC. However, at the same time, call options with a strike price of $70,000 at the end of June have been heavily sold, leading to a significant synchronized drop in front-end Vol Skew for both cryptocurrencies.

Source: Deribit (As of 11 JUN 16:00 UTC+8)
Source: SignalPlus, The front-end IV surged.
Sourc: SignalPlus, The front-end Vol Skew declined.
Data Source: Deribit, The overall distribution of ETH trading.
Data Source: Deribit, The overall distribution of BTC trading.
Source: Deribit Block Trade
Source: Deribit Block Trade

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