The size of the rate cut could determine whether Bitcoin, Ethereum, and other digital assets see a steady climb or a sudden surge in the days ahead.

Market Bets Tilt Toward a Modest Cut

According to CME’s FedWatch tool, investors are overwhelmingly pricing in a 25 basis point reduction, which would lower rates to 4%–4.25%. A smaller group sees the possibility of a deeper 50 basis point cut, though that outcome remains less likely. Either way, traders say the announcement could serve as a catalyst for crypto markets that have been consolidating in recent weeks.

Options Activity Signals Optimism

Derivatives markets are reflecting the shifting sentiment. Data shows call/put ratios improving for both Bitcoin and Ethereum, a sign that bearish positioning is fading. On Deribit, Solana’s options market is particularly strong, with calls trading at a premium over puts – evidence that traders expect upside.

Analysts Weigh the Scenarios

Amberdata’s Greg Magadini believes a surprise 50-point cut would ignite a powerful rally across crypto and even spill into gold markets. “That kind of move would be an outright buy signal,” he said, pointing to heightened gamma exposure in BTC, ETH, and SOL.

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Still, he doesn’t dismiss the smaller cut scenario. In his view, Bitcoin is likely to continue climbing regardless, while Ethereum may take longer to gather momentum. If bullish flows persist, ETH could retest its all-time highs near $5,000 within days of the Fed decision.

Crypto’s Next Chapter Hinges on Fed Policy

The improvement in options market structure highlights how much sentiment has shifted compared to earlier in the year, when traders were preparing for deeper pullbacks. For now, the crypto market appears to be positioning for gains – but whether that means a gradual recovery or a breakout depends entirely on how bold the Fed is willing to be next week.

The information provided in this article is for educational purposes only and does not constitute financial, investment, or trading advice. Coindoo.com does not endorse or recommend any specific investment strategy or cryptocurrency. Always conduct your own research and consult with a licensed financial advisor before making any investment decisions.

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