QCP Market update 15 Mar

1/ We were a few days early in positioning for the mid-March reversal, as right after option expiry on Friday there was a leveraged-driven short squeeze that took out the prior highs in both the BTC spot price as well as total futures open interest.
2/ The fresh all-time high on Saturday above $60k, coupled with the closure of traditional markets that has recently kept BTC yoked, meant a hopeful chase by retail participants that took BTC to a high of $61,800 and driving the perp funding rate to the typically unsustainable..
3/ ..maximum 200% annualized level. The 3m futures basis as well jumped to all-time highs at over 35% annualized on this leverage retail buying. ETH as well, taking cue from BTC, failed just under the huge $2k spot level and we expect it to largely underperform BTC from here..
4/ with our sights set on the ETHBTC cross possibly breaking its 14-month uptrend line and retesting the long-term support at 0.023. Thursday we have the big FOMC meeting - where expectations are for the Fed to signal an earlier lift-off of rates through their dot plot.
5/ Nominal rates have already resumed their climb in expectation of this, and we expect risk markets to pay heed to this ahead of the meeting itself. In terms of positioning, we are long end-Mar $54k puts from the middle of last week..
6/ ..as well as short calls above $60k put on earlier in the quarter. We like to keep these as the core tactical position for now, playing for the weak March seasonality and risk of a mini taper tantrum post-Thursday’s meeting.
7/ On a deeper pullback, we still see the $40-42k BTC spot level as key to maintaining our medium-term bullish view, and have longer tenor short puts just under that level for a short uneven (different strike level) BTC calendar put spread
8/ Of equal note to March’s weak seasonality is the strong April seasonality (in fact the strongest of all seasonalities) where we have had a positive April in each of the past 5 years
9/ Thus our current positioning is one where our long puts and short calls expire by 2 Apr, and we keep the upside open going into April & May.

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More from @QCPCapital

10 Mar
1/ A positive start to the week with BTC bouncing off the lows from the previous week. There has been widespread stabilization in global markets with positive macro sentiment ahead of the Fed meeting next Thursday. This improved sentiment is a result of the..
2/..recent run-up in US nominal yields appearing to lose momentum at a key technical level on the back of soothing comments from FOMC governors last week. Increasingly, BTC has seen a stronger correlation to risk markets since the start of the year, which itself is being driven..
3/ ..by expectations around the Fed and its impact on real rates. Any further decline in nominal yields will no doubt be a major positive all round, but we have our eye out longer-term for the extremely key 2% nominal level in the US 10 year..
Read 18 tweets
15 Feb
1/ It was exactly a year ago today, on Valentine's day 2020 that the market topped and eventually bled into the March 12th Black Thursday sell-off.
2/ A lot has changed in the year since - one of the most important being the unprecedented amount of liquidity global central banks have pumped into the system, single-handedly lifting every financial asset to record proportions Image
3/ We have witnessed the largest and swiftest asset price inflation in world history, and with it also the biggest disconnect between markets and the real economy in modern times
Read 26 tweets
5 Feb
𝗤𝗖𝗣 𝗠𝗮𝗿𝗸𝗲𝘁 𝗨𝗽𝗱𝗮𝘁𝗲 𝟱 𝗙𝗲𝗯

1/ Another consolidation week in BTC, as ETH continues grinding higher on yet another Defi wave and a massive increase in speculative leverage ahead of Monday’s CME ETH futures listing
2/ The ETH futures open interest has increased 300% in just the past month and 50% in the past week alone, and we are now at $6bn OI even before CME opens for trading
3/ To put this ETH OI in perspective, we never got past $6bn in BTC OI in all the many years of futures trading, even with CME, until November last year when all the traditional institutions became involved
Read 15 tweets
31 Jan
1/ Right after a massive Friday Deribit month-end option expiry, Elon Musk released a cryptic (somewhat bullish) tweet, causing a huge squeeze higher in BTC price. This closed out a strange week in markets marked by social media-engineered squeezes in tickers like GME & DOGE.
On this 'Elon rally' BTC rose by $120bn in mkt cap on the tweet alone, roughly 2/3 of Elon's net worth before coming off highs but closing higher on the day - market seems to have priced in possibility that Microstrat's rocket scientist has won Musk over to the Bitcoin camp.
3/ For us Elon Musk's twitter has always been his crazy alter-ego and the tweet might be cheekiness more than anything. We treat it as near-term volatility spike similar to observations the last 2-3 weeks. We don't believe that it changes any medium-to-long term market dynamics
Read 20 tweets
22 Jan
QCP Market Update 22 Jan

1/ The broad price puke from yesterday has been blamed on some negative headlines out of Biden's new "crypto unfriendly" administration. However, we think that the market was already due for a correction
2/ We've always been most worried about the US regulatory hammer from this new administration - but Yellen's & Powell's remarks on crypto regulation sounded less draconian than we had initially feared, although many observers seemed to have been taken by surprise by it
3/ We think this dip is largely the result of market positioning. Long crypto has been become a crowded consensus trade and a correction was bound to happen, the negative headlines were just an excuse for longs to unwind
Read 15 tweets

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