QCP Capital: Crypto Market Volatility Expected to Spike as U.S. Presidential Election Day Approaches

On September 19th, QCP Capital posted on its official channel that the Federal Reserve announced a 50 basis point rate cut and plans to cut rates two more times this year and four times in 2025. Despite Powell's ambiguity about the magnitude and pace of subsequent rate cuts, all eyes will be on the upcoming release of labor data for indications.

The U.S. 2yr/10yr Treasury spread, a recession indicator, has been inverted since July 2022, but has recently recovered to +8 bps, reflecting market optimism and a shift towards risky assets. The S&P 500 attempted to make a new high, but closed lower after the FOMC meeting.

In options, implied volatility fell sharply after the FOMC meeting, with Bitcoin's volatility dropping 19 bps and Ether's dropping 18 bps. Bitcoin rose from $59,000 to $62,000 after the FOMC meeting.

We expect volatility to spike as the U.S. presidential election day approaches, just after the next FOMC meeting.