QCP Capital report says bitcoin option traders anticipate near-term volatility

Increased front-end volatility and topside risk reversals in bitcoin options suggests derivatives traders expect near-term price gains, according to analysts.

Thursday's QCP Capital report said bitcoin front-end volatility has increased by 5 points in the near term, suggesting that there could be more significant price movements for the digital asset over coming weeks. The analysts stressed that this heightened near-term volatility is combined with risk reversals favoring the topside, indicating that there is more demand, or higher expectations, for the price of bitcoin to rise.

"Bitcoin BTC +0.56% front-end volatility increased by 5 points this morning, with risk reversals favoring the topside, signaling the market's anticipation of potential topside volatility," QCP Capital analysts said.

Markets anticipate cooler CPI inflation reading

The latest core Consumer Price Index (CPI) reading is set to be released later on Thursday. It is anticipated to reveal a 0.2% increase in June, marking the second consecutive month of such gains, which would be the smallest back-to-back increases in core inflation since August 2023. Analysts indicate that this moderated pace could guide U.S. Federal Reserve officials in deciding when to begin a rate-cut cycle. However, according to the Chicago Mercantile Exchange (CME) FedWatch tool , interest rate traders have reduced the chances of a rate cut in September from 71.8% on Wednesday, to 68.1% today.

"Tonight’s CPI release has captured everyone’s attention. The market anticipates around a 70% chance of a rate cut in September. This optimism has been reflected in the continued rally in equities but has yet to be priced into the crypto market," QCP Capital analysts said.

The bitcoin price traded flat in the past 24 hours and was changing hands for $58,505 at 7:40 a.m. ET, according to The Block's Price Page .