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Last week’s economic data set the stage for key Fed decisions this week. Markets and crypto are positioning for potential rate cuts, while volatility remains historically low. Investors are watching for any surprises that could shift momentum across digital assets and broader markets. Learn more in this week's Amberdata Derivatives Newsletter:
USA Week Ahead (ET):
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Wednesday 2pm - FOMC Rate decision
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Disclaimer: Nothing here is trading advice or solicitation. This is for educational purposes only.
Authors have holdings in BTC, ETH, and Derive and may change their holdings anytime.
MACRO Weekly Overview
Last week’s macro economic data really provides needed contextualization for the Feds FOMC rate decision this Wednesday.
The CME FedWatch Tool currently shows Fed Funds futures pricing in only a 25-bps rate cut this week with 96.4% certainty.
Absolutely no chance of a 0-bps “no-cut” and 3.6% chance of a 50-bps cut.
Chart: CME FedWatch Tool
Although unlikely, if we get a “surprise” 50-bps cut the market is under-positioned for that outcome. This would send crypto roaring higher if we get it.
Gold would go absolutely nuts as well. Tech… (continue to go nuts).
Historically, Powell has been cautious about knee-jerk reactions to policy rates, but BLS labour market revisions showed that over 900k FEWER jobs had been added in the 12-months through March 2025 then previously reported.
This revision, along with weakening payrolls over the past few months, gives Powell a strong backdrop for this shift away from inflation concerns and towards a labor market focus.
PPI and CPI data came in as expected last Wednesday and Thursday respectively. This also makes the situation more tenable for cutting rates.
That said, I really believe the 96% 25-bps cut is the most likely outcome. A non-surprise, but it’s always good to have a trading plan ready for the unlikely outcome… just in case.
BTC: $115,869 (+4.3% / 7-day)
ETH: $4,620 (+7.9% / 7-day)
SOL: $241.09 (+19.6% / 7-day)
Crypto Options Overview
Tokenization themes, staking rewards, altcoin outperformance… strong equities, precious metals rallying and the USD continuing to drop…
These are all current trends going into the start of Q4 2025.
An EOY rally is on everyone mind, especially going into the start of a rate cutting cycle.
Looking at BTC realized volatility, we can see we’re currently at 12-month lows.
Chart: BTC 12-month RV
This might be tempting for some to buying upside call exposure, but keep in mind RV has stubbornly underperformed IV expectations as of late.
Chart: BTC “actual” VRP
In my mind it’s best to continue to assume the lower vol will persist and structure a trade that can capture delta “upside” while finding benefits from persistently lower volatility.
Chart: BTC ATM Term Structure
The current volatility term structure shows a steep Contango shape with inflection on the Dec EOY expiration (meaning this is the “pricey” expiration).
Chart: BTC ATM Term Structure
The atm term structure Contango is historically steep compared to the past 4 years.
Dealers are also long a lot of gamma right now, especially ATM.
Chart: BTC GEX positioning
Given this week’s FOMC rate decision, if it comes inline at -25bps (as expected) then a continued calm “grind higher” for BTC is my base case, while ETH likely needs another week or so to retest ATH’s and break into the $5,000+ territory.
This would be good for the diagonal ETH trade talked about last week.
A surprise 50bps rate cut would be a massive +gamma BUY signal for ETH, SOL and BTC.
ETH preferred.
In that case, I think buying weekly call upside would be a good trade, immediately after the rate cut in announced… for a “fast money” trade.
Paradigm Top Trades this Week
BTC Cumulative Taker Flow
ETH Cumulative Taker Flow
BTC Cumulative OI
ETH Cumulative OI
BTC
ETH
- Eth Strategy, an onchain version of MicroStrategy for ETH,conducted its first perpetual note trade on Derive last week and sold 213 x $4700 weekly ETH calls at prices better than top of book on Deribit.
- Further information about this partnership can be found here.
- A further 340K of $DRV was bought back this week, the 30th such buyback.
Derive also announced its new API broker program for extensive fee rebates.
AMBERDATA DISCLAIMER: The information provided in this research is for educational purposes only and is not investment or financial advice. Please do your own research before making any investment decisions. None of the information in this report constitutes, or should be relied on as a suggestion, offer, or other solicitation to engage in, or refrain from engaging, in any purchase, sale, or any other investment-related activity. Cryptocurrency investments are volatile and high risk in nature. Don't invest more than what you can afford to lose.
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