Last week’s 25bps Fed rate cut triggered a mixed market reaction, initially dovish, then reversed after Powell emphasized persistent inflation and ruled out larger cuts. Gold and Bitcoin continue to trend higher, with options markets highlighting a divergence: bullish demand for gold vs. institutional hedging in BTC. Fed independence remains the key driver for asset prices heading into 2026. Learn more in this week's newsletter:

USA Week Ahead (ET):

  1. Friday 8:30am - PCE Inflation Index

*Various Fed Governors Speak throughout the week*

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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.


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MACRO Weekly Overview

Last week’s FOMC reaction was mixed.

This was further highlighted by messaging from Powell who himself said "No one knows where the economy will be in 3-years".

Initially the dollar dropped (sending Gold and risk-assets higher) as the 25bps cut was followed by dovish Fed projections for rates, which show 2 more rate cuts for 2025. 

Chart: Summary of Economic Projections (Click here for link) 

Summary of Economic Projections

The CME FedWatch Tool prices an 80% probability that rates end 350-375bps (today we're at 400-425bps).

Chart: DEC 10th FOMC - CME FedWatch Tool (Click here for link) 

DEC 10th FOMC - CME FedWatch Tool

This initial reaction from the market was positive as cheaper money was being promised.

Later during Powell's speech he noted that a 50bps cut today was completely off-the-table, which struck the markets as "Hawkish" on rates.

Powell also followed up by saying he believes inflation is elevated and it will continue to persist, despite the current slowdown in jobs.

The market reversed the initial dovish reaction as Powell's conviction around continued cuts seems "flimsy" at best and there was already strong positioning in the markets for future rate cuts. As a result, traders pulled back.

Chart: Gold Futures Hourly Chart

Gold Futures Hourly Chart

Overall, where we go from here is almost where we started.

The Fed is a bit more worried about jobs but overall they're going to continue to monitor both inflation and unemployment.

Powell himself showed a lot of uncertainty around the current environment.

I continue to believe the biggest driver of asset prices, especially Gold and Bitcoin, revolves around the Fed's independence.

This independence remains in question especially going into 2026 when a new Fed Chairman will take over.

Gold and Bitcoin remain in a strong appreciation trend and I don't think anything today changes that.

Next week we have various Fed Governors speaking throughout the week (essential everyday) with Friday’s PCE inflation number. 

The PCE is the Fed’s preferred inflation measurement and CORE PCE is the official inflation rate used for the Fed’s 2% inflation target. 

Chart: PCE 12-month Inflation Rate

percent change in PCE price indexes

This week’s release is estimated to come in at +2.7% for PCE and +2.9% PCE Core. A slight uptick from the previous month. 

Any outlier here will help give clarity to rates, although markets seem certain of two more -25bps cuts this year. 


BTC ETH SOL

BTC: $115,255 (-0.6% / 7-day)

ETH: $4,445 (-3.9% / 7-day)

SOL: $236.09 (-3.0% / 7-day)

Crypto Options Overview

I keep coming back to this theme… The trade still looks interesting: 

180-day 25-delta Risk-Reversal Skew / ATM [(C-P)/atm]

GOLD = +3.5%

Bitcoin = -0.45%

Chart: GOLD Futures (finviz.com) 

GOLD Futures (finviz.com) 

Given that Bitcoin trades in some form as “Digital Gold” the Fed independence breakdown trade should be VERY bullish for both assets. 

The chart above those the current trend for GOLD futures. 

I wouldn’t fight this trend, there’s no reason to expect things to stop now… especially as the Fed is cutting rates while admitting they expect inflation to remain elevated. 

Chart: GVZ Gold VIX (tradingView.com)

GVZ Gold VIX (tradingView.com)

Gold volatility has come down a lot versus April of this year and recently in early September. 

What’s clear to the market however is that Gold volatility is an upside phenomenon, therefore the ∆25RR/atm is trading at +3.5%

Chart: BTC ATM Volatility 180-dte (pro.amberdata.io

BTC volatility is a multi-year lows (and yes, vol can remain low for a long time… I’m also skeptical about buying outright vol)… 

But what’s fascinating to me is the divergence in the ∆25RR/atm skew compared to Gold. 

Chart: BTC ∆25RR/atm (pro.amberdata.io) 

BTC ∆25RR/atm

The 180-day RR skew is below the “zero-line” in an environment where risk assets are trading higher and Gold is trading higher. 

Why is this the case? 

  • Institutional investors are treating BTC as a risk-asset and hedging their holdings like they would equities
  • BTC in a non-yielding asset, selling covered calls is a source of income
  • BTC “covered call” ETFs have growing AUMs

These reasons explain the “Flows” impacting the BTC volatility surface, but I do believe theres a source of opportunity here. 

The market is still subject to “upside surprises” in BTC (such as a G20 strategic reserve… USA, Central bank accumulation… Japan, Sovereign Wealth Fund allocation… looking at you Norway, etc). 

I think this is an interesting area to look at for longer term exposure using options. 

Anyways, it’s what I’m seeing this week. 


Paradigm Top Trades this Week

BTC Cumulative Taker Flow

ETH Cumulative Taker Flow

BTC Cumulative OI

ETH Cumulative OI

ETH Cumulative OI

BTC

Amberdata derivatives block volume traded and puts vs calls volume Bitcoin

ETH

Amberdata derivatives block volume traded and puts vs calls volume Ethereum

 

DERIVE crypto DeFi options
  • 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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Greg Magadini

Greg Magadini is the Director of Derivatives at Amberdata. Previously, he co-founded Genesis Volatility (later acquired by Amberdata). Greg Magadini started his career as a proprietary trader for DRW and Chopper Trading in Chicago IL. Greg has nearly 15-years of options trading experience and has been active in the...

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