According to Odaily analyst Adam, the Federal Reserve's latest policy meeting cut interest rates by 25 basis points as expected and announced the resumption of its $40 billion monthly purchase program of short-term Treasury bills (T-bills). The overall stance was dovish, which will help improve liquidity in the financial system and is beneficial to the market.
However, Adam pointed out that with the Christmas holidays and year-end closing just around the corner, this period is typically the time when the crypto market experiences its lowest liquidity and lowest activity. Therefore, "it is too early to talk about restarting the bull market," and the momentum to drive a market reversal is limited.
Options data shows that both BTC and ETH had high concentrations of open interest at the end of December.
The biggest pain point for BTC is at $100,000;
The biggest pain point for ETH is at $3,200.
Meanwhile, implied volatility for major expiration dates this month continued to decline, reflecting a significant decrease in market expectations for short-term volatility.
Adam also pointed out that Skew has remained negative for an extended period this month, meaning that for the same Delta, put option prices are significantly higher than call option prices. The reasons for this include:
After the market stabilized overall, the covered call strategy became dominant, which suppressed call pricing.
With the recent market weakness, more traders are choosing to hedge against downside risk through put options.
In summary, the current sentiment in the crypto market is weak, liquidity is poor at the end of the year, and the mainstream view in the options market points to a "slow decline"; however, we should also be wary of a short-term reversal brought about by sudden positive news (although the probability is low).
