The Federal Reserve's rate cut and bond purchases benefit the crypto market, but year-end liquidity remains weak

According to sources from Ha Shilian, the Federal Reserve cut interest rates by 25 basis points and restarted short-term Treasury purchases of $40 billion, aiming to supplement financial system liquidity, which is positive for the overall market. However, it is still premature to revisit quantitative easing (QE) and restart a bull market. As Christmas and the year-end transition approach, liquidity in the crypto market is poor, market activity is low, and bullish momentum is limited.
Data shows that by the end of December, the crypto options market had over 50% of options positions accumulated. Bitcoin's biggest pain point is at the $100,000 mark, while Ethereum's is at $3,200. Implied volatility (IV) for major maturities this month has been on a downward trend, indicating that market expectations for volatility this month are gradually weakening. Additionally, the Skew indicator remains persistently negative, with put prices significantly higher than calls at the same Delta, reflecting a stable market with covered strategies dominating, and more traders using put options as a hedge against market declines.
Overall, the crypto market sentiment is currently subdued, liquidity is poor, and the options market generally expects a slow decline. However, caution should be exercised regarding potential market reversals triggered by unexpected positive news, although such a possibility remains low.

#Cryptocurrency #Blockchain #CryptoMarket #Liquidity #OptionsMarket