1/ Hello from Miami! Point-form summary this week with some insights from our meeting with Paul Tudor Jones. ๐๐งต
2/ - Our short vol view on BTC and ETH from last week has worked very well. Both BTC and ETH vols have dropped around 5-10% (week-on-week BTC price remains at 56,000 level).
3/ - We turned long a massive amount of gamma from the month-end expiry on Friday. Gamma realised very well because of the knee jerk reaction to the Omicron headlines as well as Powellโs recognition of high inflation and indication of an accelerated taper.
4/ The market bounced back quickly on reports of Omicron symptoms being mild (BTC tested 53,320 and ETH tested 3,950 before rallying higher).
5/ - ETH has outperformed BTC this week possibly on headlines of a possible ETH ETF which we expected to happen at some point. Kelly Strategic Management filed for approval this week.
6/ - Options market is heavily discounting calls with risk reversals still skewed to puts in spite of the spot bounce. Could be a decent opportunity to buy some calls if you have a long view into 2022. Weโve now flipped to a topside skew for both BTC and ETH.
7/ - Position-wise we continue to be heavily short vols in BTC and ETH against long vols in the Alts. We will be turning long gamma again post-expiry. We have a bullish bias on ETH spot with a long gamma position on the topside vs short gamma on the downside.
8/ - LUNA broke out strong this week making a new all-time high of $60. The 7.2 million LUNA burned this week was likely to be a catalyst for the move. Our LUNA option book has been growing well with almost 2 million notional through defi option vaults.
9/ - QRDO has been another strong performer making a 170% move from $4.7 to $7.5 in November. QRDO is a layer 2 protocol focused on cross-chain interoperability and security of digital assets.
10/ They recently announced a partnership with Metamask and have plans to integrate Layer 1s such as ALGO, SOL, BSC, DOT, ADA and LUNA. This could potentially serve as a catalyst for further upside for QRDO.
11/ - NEAR is a project weโve been focusing on. The protocol's blockchain reached a total of 50 million transactions yesterday. Earlier this month, NEAR launched their Nightshade sharding as solution to increase scalability and network performance.
12/ Tied together with the staggering 800 million funding initiative that was announced back in October. We can expect significant growth for NEAR's ecosystem in the future.
13/ - ALGOโs much anticipated conference happened this week with significant announcements of new ecosystem funds being set up (Hivemind and Borderless). We saw a rally from $1.5860 to $2.0470 before coming back to $1.80 levels.
14/ The volatility has been great for our significant ALGO vol positions from the launch of the ALGO defi vaults last week. (algorand.foundation/news/algo-optiโฆ)
15/ - We caught up with trading legend Paul Tudor Jones this week. He shared his deep concern about overstretched markets as we cross into 2022.
16/ Incredible valuations in both traditional and crypto markets coupled with inflation levels that havenโt been seen in decades could be setting macro markets up for a significant correction.
17/ Taking profits on deep in-the-money positions is a logical step to take. With that said, he expects crypto to outperform if the global economy faces persistent inflation.
18/ For updates like this, follow our telegram group: t.me/QCPbroadcast
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1/ Since our last update on 10 November. BTC went from a 69,000 high to a 58,638 low today (-15%) and ETH has gone from a 4,868 high to a 4,108 low today (-15.6%).
A series of negative factors could be the reason for this sell-off. Hereโs a quick timeline. ๐งต
2/ 10 November: Shock US inflation print at 6.2%, the highest since November 1990, creates a โrisk-offโ sentiment across global markets. How long can the Fed continue to claim inflation is transitory before being forced to take corrective action?
3/ 12 November: The SEC rejects VenEckโs proposal to launch a physical Bitcoin ETF.
1/ All-time highs all around this week with BTC and ETH trading to 69,000 and 4,868 respectively, taking total crypto market capitalisation above $3 trillion.
2/ The bullishness has not been exclusive to crypto with major equity indices also trading at record highs this week; S&P500 at 4701, Russell at 2442, NASDAQ at 16359.
3/ There seems to be a melt-up across global markets with participants chasing topside on the back of positive earnings and in anticipation of global trade reopening. We expect this broad bullishness to perpetuate in the near-term.
1/ Held in Singapore last week, the Asia Financial Markets Forum hosted by @business, featured Senior Minister Tharman Shanmugaratnam, major bank CEOs, top hedge fund managers and us! (representing the crypto community)
1/ As expected, BTC is taking a breather after being stretched at new highs (67,000). ETH tested the previous high (4,385) and has come back off as well. BTC has broken below 60,000 and ETH has broken below 4,000.
2/ Despite this quick dip from the highs, the market feels relatively calm and perhaps even slightly optimistic that this is just a dip before a larger rally into year-end.
3/ In vols, besides a spike in front-end ETH vols, there has been no significant reaction to this move. In fact, the market remains optimistic with risk reversals still skewed to the call side (Chart)
The BTC ETF approval by the SEC and successful launch of the Proshares ETF ($BITO) has fueled a strong rally in BTC beyond the 64,900 previous high to a new all-time high of 67,000. ๐งต
We remain optimistic but are cautious about downside risk for the following reasons:
1) Leverage levels in the market are very high.
Futures aggregated Open Interest exceeded 400k BTC notional (Chart). This is close to 431k BTC notional OI at the previous all-time high.