Bitcoin Volatility Looms as CPI and Fed Near

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Big economic week is ahead with inflation datacoming on Thursday but BTC is untypically silent.

Bitcoin has spent the past several days struggling to decisively break past $80,000, and options traders don’t appear too concerned about an imminent volatility explosion despite the major economic events in the next ten days.

QCP Capital’s latest market analysis suggests that BTC’s 18-day at-the-money implied volatility currently sits at just 37%-38%, despite the upcoming US inflation report and the subsequent FOMC meeting.

Waiting for Clarity
The analysts believe the volatility compression reflects a market waiting for additional information rather than traders expressing strong directional conviction. This narrative received some confirmation last week after the release of the August jobs report, which significantly exceeded expectations, with the US economy adding 162,000 jobs compared to forecasts of around 55,000. Unemployment remained at 4.1% while average hourly earnings increased 0.3% MoM.

The reading strengthened the argument that the US remains resilient and shifted attention back toward inflation and the Fed’s next move. Markets now assign a 58% probability of a 25-basis-point rate hike at the September 15-16 meeting.

Major institutions have also turned hawkish, especially after Kevin Warsh’s speech at the end of August. UBS expects the central bank to raise rates in September and also in December after previously forecasting no changes this year.

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