coindesk.com
U.S. Federal Reserve (Fed) policy and macroeconomic factors are no longer the focal points for crypto traders.
That's the message from the derivatives market, which shows no signs of a let-up in demand for puts, or bearish bets, tied to bitcoin and ether in the wake of the dovish Fed minutes released Wednesday.
The persistent put bias indicates the market is squarely focused on contagion sparked by the downfall of Sam Bankman-Fried's FTX, formerly the world's third-biggest crypto trading platform, and is unlikely to find a bottom solely on the back of improving macro conditions.
"Crypto is still very much-event risk driven, reacting to news/rumors about the health of major crypto lender Genesis," Dick Lo, the founder and CEO of quant-driven trading firm TDX Strategies, said.
The crypto market, roiled by the Fed's aggressive liquidity tightening, has long been waiting for the central bank to signal a shift away from rapid-fire interest rate hikes. The market got what it wanted yesterday.
"A substantial majority of participants judged that a slowing in the pace of [interest rate] increase would likely soon be appropriate," the minutes said.
The minutes also hinted at a lack of support for Chairman Jerome Powell's post-meeting “higher rates for longer" statement, sending the U.S. dollar and Treasury yields lower and stocks higher.
Yet, bitcoin and ether put-call skews, which measure the cost of bullish calls relative to bearish puts, remain entrenched in negative territory, implying a bias for puts.
