Massive Volatility Incoming: Altcoin Leverage Soars Before Fed Rate Cut
Ahead of a significant Federal Reserve policy announcement this week, leveraged betting on altcoins started to soar. Crypto markets may experience a great deal of volatility this month as a result of this development. Right now, open positions in altcoins are almost equal to those in Bitcoin. Blue-chip digital assets have historically declined in response to this.
An uptick in altcoin leverage is the eagerness for alt season,
Stephen Gregory, founder of crypto trading platform Vtrader
Investors Rotate Into Altcoins as Fed Looms
Altcoin open positions increased from $30 billion on September 1 to $38.6 billion on Monday, according to Coinalyze data. This was more than Ethereum’s $30 billion and Bitcoin‘s $40 billion. Although open interest doesn’t really give prices a directional bias, it can show that experienced traders are setting up shop before important occurrences. Gregory stated that in the short run, people are switching from Bitcoin to alternative currencies. He warned that bigger traders might be trying to get ahead of Wednesday’s expected rate decrease.
The Fed’s rate cut decision could cause retail to assume its bullish while whales lever up on shorts and push a liquidation event,
Gregory
Trump Pushes Rate Cut Amid Crypto Market Volatility
As the central bank struggles to maintain its independence in the face of pressure from the Trump administration, tensions have increased in both traditional and cryptocurrency markets regarding its future monetary policies. The Fed has already been pushed by President Trump and Treasury Secretary Scott Bessent to lower its September Funds Rate by as much as 50 basis points. Several times this year, they have even gone so far as to demand the resignation of Fed Chair Jerome Powell.
Shawn Young, principal analyst at MEXC Research, stated that traders are now preparing for possible volatility in light of the situation. The analyst cited a rise in one-week 25-delta skews and one-week at-the-money implied volatility as proof of expected short-term price fluctuations.
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