FED day, which is a critical day for Bitcoin, has finally arrived. The FED, which has kept interest rates constant for a long time, is expected to keep interest rates constant today without making a surprise decision.
However, while the FED is expected to signal the first interest rate cut in September, cryptocurrency analysis company Blofin said that BTC volatility will increase before the FED decision and the options expiring on Friday, August 2.
In a recent report, he stated that the basic scenario before the FED decision is a slow decline in inflation and economic growth and the risks of recession are not very high.
Pointing out that there was a significant negative gamma in Bitcoin between $65,000 and $70,000 due to investors' risk aversion before the FED decision, Blofin analysts said that negative gamma indicates potentially high volatility.
Citing BTC options expiring on August 2 as the reason for the negative gamma in Bitcoin, Blofin warned investors that BTC volatility may increase.
“The base scenario is a slow decline in inflation and growth and recession risks not being very high.
The data shows a significant negative gamma between $65,000 and $70,000, which is increasing price volatility. The main reason for this negative range is the options that dominate the BTC options market and expire on August 2. As the maturity date approaches, fluctuations in market prices may increase and may require increased risk management in the coming days.
Negative gamma means greater potential volatility, and any price changes caused by good or bad news may be significantly amplified by market makers' hedging behavior.”
*This is not investment advice.