Bitcoin volatility likely to ease as market anticipates Fed rate cuts, says QCP Capital

"In the lead-up to next week’s U.S. non-farm payroll report, we expect market volatility to continue its downtrend as the market positions itself for potential rate cuts by the Fed." QCP Capital analysts said.

According to QCP Capital, next week's U.S. non-farm payrolls and Friday's GDP data are expected to provide market participants with greater clarity on the likelihood and potential scale of a rate cut at the next Federal Open Market Committee meeting on Sept. 18.

Key U.S. economic data releases

U.S. non-farm payrolls data will be released on Friday, Sept. 6. This closely watched metric can influence the Federal Reserve's decisions on its interest rate trajectory. The previous non-farm payrolls report in early August revealed an unexpected rise in the U.S. unemployment rate to 4.3% from 4.1%, sparking a global market sell-off amid concerns that the Fed may be lagging in its rate-cutting efforts.

QCP Capital analysts also highlighted the influence of today's upcoming U.S. GDP report on bitcoin's price performance, although they noted that it would likely have a smaller effect on the cryptocurrency market — particularly if it reinforces the prevailing narrative of a slowing U.S. economy. While the economy has shown signs of slowing down, it's still uncertain whether a recession is imminent.

The analysts observed derivatives market participants hedging for potential near-term downside movements for both bitcoin and ether. "Risk reversals until October are still skewed towards puts in both bitcoin and Ethereum, indicating that the market remains cautious about the downside," they said.

The  price of bitcoin decreased by 1% in the past 24 hours to trade at $59,500 at 7:39 a.m. ET. Bitcoin dominance is at 53.9%, and ether dominance is at 13.9%, according to CoinGecko data.