Could the Fed Meeting Trigger Significant Price Fluctuations in Bitcoin, Ether, Solana, and XRP?

It’s the Federal Reserve’s meeting once more, and market participants are keen to gauge the potential implications of this significant occasion. As indicated by the implied volatility indices from Volmex, notable cryptocurrencies may experience some fluctuations, although extreme volatility is not expected.

Based on data from TradingView, Volmex’s one-day bitcoin implied volatility index (BVIV) was recorded at 49%, signaling an anticipated 24-hour price movement of 2.56%.

This translates to a potential price variation of $2,470 either way, with bitcoin currently trading around $96,500.

The daily volatility percentage is computed by dividing the annualized percentage by the square root of 365, reflecting the continuous nature of digital asset trading. In contrast, traditional market calculations typically use the square root of 252 for annual to daily conversion.

Currently, Ethereum (ETH) shows an annualized one-day volatility of 66%, forecasting a potential price movement of 3.45%. Similarly, the implied volatility index for Solana’s SOL points to an expected daily fluctuation of 4.3%.

Volmex does not provide implied volatility metrics for XRP, the cryptocurrency focused on payment solutions. However, one can estimate its potential movement through the forward implied volatility derived from options available on Deribit.

At the time of writing, the forward implied volatility for May 8 is pegged at 77.98%, indicating an expected daily fluctuation of 4.08%.

The Federal Reserve is set to reveal its decision on interest rates at 18:00 UTC, followed by a press conference with Chairman Jerome Powell at 18:30 UTC.

The anticipation is that the Fed will maintain current rates, yet remarks regarding the economic outlook amid trade tensions and hints of a potential rate cut in June could stir market reactions.