Fears of a downside for bitcoin (BTC) and ether (ETH) have eased significantly as markets position themselves ahead of the Federal Reserve’s anticipated rate cut on Sept. 17. Options market data suggest that the next upward moves for these cryptocurrencies will largely depend on the magnitude of the Fed’s decision.

BTC’s seven-day call/put skew, which measures implied volatility distribution between calls and puts expiring in a week, has rebounded to near zero from a bearish 4% last week, according to Amberdata. Longer-term skews for 30- and 60-day options, while still slightly negative, have also recovered from recent lows, signaling a clear reduction in downside concerns. Ether shows a similar pattern in its options market.

The skew reflects market sentiment: a positive reading indicates bullish positioning in call options, while a negative skew points to increased demand for puts or downside protection. The reset in options coincides with renewed upward momentum in prices. Over the past week, BTC has risen more than 4% to over $116,000, while ETH has climbed nearly 8% to $4,650, according to CoinDesk data.

CME Fed funds futures currently price in over a 90% probability of a 25-basis-point rate cut to 4%-4.25%, though a surprise 50-bps move remains a possibility. Greg Magadini, director of derivatives at Amberdata, said a larger-than-expected cut would act as a strong “+gamma buy signal” for ETH, SOL, and BTC, with gold likely to react sharply as well. Deribit-listed SOL options already show strong bullish sentiment, with calls trading at a 4–5 volatility premium over puts.

Magadini added that if the Fed delivers the expected 25-bps cut, BTC is likely to continue a steady upward grind, while ETH may take another week or so to retest all-time highs and break above $5,000 convincingly.