Fears of a downside for bitcoin (BTC) and ether (ETH) have eased substantially, according to the latest options market data. However, the pace of the next upward move in these cryptocurrencies will largely hinge on the magnitude of the anticipated Fed rate cut scheduled for Sept. 17.

BTC’s seven-day call/put skew, which measures how implied volatility is distributed across calls versus puts expiring in a week, has recovered to nearly zero from the bearish 4% a week ago, according to data source Amberdata.

The 30- and 60-day option skews, though still slightly negative, have rebounded from last week’s lows, signaling a notable easing of downside fears. Ether’s options skew is exhibiting a similar pattern at the time of writing.

The skew shows the market’s directional bias, or the extent to which traders are more concerned about prices rising or falling. A positive skew suggests a bias towards calls or bullish option plays, while a negative reading indicates relatively higher demand for put options or downside protection.

The reset in options comes as bitcoin and ether prices see a renewed upswing in the lead-up to Wednesday’s Fed rate decision, where the central bank is widely expected to cut rates and lay the groundwork for additional easing over the coming months. BTC has gained over 4% to over $116,000 in seven days, with ether rising nearly 8% to $4,650, according to CoinDesk data.

What happens next largely depends on the size of the impending Fed rate cut. According to CME’s Fed funds futures, traders have priced in over 90% probability that the central bank will cut rates by 25 basis points (bps) to 4%-4.25%. But there is also a slight possibility of a jumbo 50 bps move.

BTC could go berserk in case the Fed delivers the surprise 50 bps move.

«A surprise 50 bps rate cut would be a massive +gamma BUY signal for ETH, SOL and BTC,» Greg Magadini, director of derivatives at Amberdata, said in an email. «Gold will go absolutely nuts as well.»

Note that the Deribit-listed SOL options already exhibit a strong bullish sentiment, with calls trading at 4-5 volatility premium to puts.

Magadini explained that if the decision comes in line with expectations for a 25 bps cut, then a continued calm «grind higher» for BTC looks likely. ETH, meanwhile, may take another week or so to retest all-time highs and convincingly trade above $5,000, he added.