A month ago, markets leaned toward an October Fed hike. Today, futures price roughly a 90% chance of a hold.
So Wednesday's decision is largely expected. What Warsh says about December could matter more, especially with fresh GDP and inflation data arriving less than a day later.
Meanwhile, the positioning setup is interesting. Roughly a third of Deribit's BTC options open interest expires Friday. Calls account for nearly two-thirds of that expiry, with significant positioning built when BTC was trading higher.
And there's another detail worth watching. Last week's US spot $BTC ETFs recorded roughly $300M in net inflows, but BlackRock's IBIT alone attracted ~$566M. The other funds collectively saw outflows. $ETH ETFs lost another ~$221M.
That's hardly broad-based demand.
Now add Big Tech earnings testing risk appetite, Coinbase reporting on crypto activity, and a large options expiry immediately afterward. Plenty of reasons for volatility. Far fewer reasons to assume every move reflects genuine demand.
I'm less interested in predicting Wednesday's first reaction. I want to see what happens after Friday's expiry, when positions have been rolled, hedges adjusted, and the headlines have settled.
A market reacting to news and a market attracting fresh capital are two very different things.