Traders are aggressively buying Oct 2025-expiring put options amid surging bearish bets on short-term markets. Key drivers: Deteriorating labor data showing higher unemployment risks and lower earnings growth; Fed's 95% priced-in rate cut on Oct 29 signaling economic weakness; renewed US-China trade tensions eroding gains; and stubborn inflation amid political gridlock. This hedges against a potential 5-10% S&P 500 pullback by Q4 end.
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Rising Fed rate cut expectations (e.g., 25bps in Sep 2025) boost crypto liquidity by easing financial conditions, weakening USD, and spurring risk appetite. This injects capital into markets, raises trading volumes (BTC/ETH futures OI ~$16.7B), and attracts institutional inflows via ETFs, driving prices up while enhancing DeFi activity.
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In a Fed rate cut cycle, crypto markets may rally as lower rates boost liquidity and risk appetite, driving investment into assets like Bitcoin. Volatility could rise with economic uncertainty.
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