- From May’s ‘extreme greed’ level, market sentiment has eased toward a neutral level.
- Traders were offensively positioned for an upside ahead of the Fed rate decision.
Crypto market sentiment has retreated to nearly neutral levels ahead of this week’s Fed rate decision and Israel-Iran escalations.
Unlike last week’s ‘greed level’ reading of 62 and ‘extreme greed’ values of 78 in May, sentiment has recalibrated to 60.
Bitcoin resilience, mixed signals
The Fed rate decision on the 18th of June is one of the key events this week. However, the market was pricing over a 99% chance that the interest rate would remain unchanged at 4.25-4.50%.
Source: CME FedWatch
For perspective, U.S. inflation has remained overall muted, and most experts forecast a potential relaxed rate policy from Q3 (around September).
In such a scenario, rate cuts would mean cheaper capital and risk-on sentiment that can lift crypto markets, including Bitcoin [BTC].
However, for the upcoming Fed announcement, any hawkish tone could add to the risk-off environment. On the contrary, a bullish update could fuel market optimism.
But given the headline geopolitical tensions in the Middle East, the market could remain on the edge until a potential solution to the chaos is reached.
Surprisingly, Glassnode reported that market positioning remained bullish, with rising demand for short-dated calls (bullish bets) over puts (bearish bets).
“Over the past week, $BTC 25 Delta Skew has flipped decisively bullish – especially in short-dated options – despite a slight price decline. 1-week: -2.6% → +10.1%,1-month: -2.2% → +4.9%. Traders are aggressively positioning for near-term upside or volatility.”
In addition, Swissblock analysts also pointed out that the BTC bullish structure was still intact and in a ‘low-risk’ regime despite the market jitters.
But Swissblock’s sister company, Bitcoin Vector, highlighted that there was ‘little evidence of sustained spot conviction.’
“Structurally, Bitcoin remains intact, but…continues to trade within a tactical range, little evidence of sustained spot conviction…”
On the price front, there was a +$6 billion liquidity pool on the upside if BTC crosses $112K. Similarly, there was about a $5.9 billion pool on the lower side of price action.
These areas ($103K, $108K, $110K) can act as price magnets, hence price could either hit $103K or zoom to $110K-$112K.
