1/ If anyone had any doubt that the crypto market is becoming institutional, our option desk traded over $2 billion in options just this week. ๐งต
2/The flows have mostly been decent two-way in BTC and ETH but weโve also seen notable OTC flows in ALGO and LUNA (no surprise as liquidity is streaming out of the two largest Altcoin Defi Option Vaults).
3/ In the past week, panic and nervousness have been leaving the market with vols generally easing (Chart) and BTC risk reversals turning up from -7% to -2% before settling around -5% as we head into FOMC (Chart).
4/ Our view into this upcoming FOMC and beyond is that the market is less prepared for a dovish-leaning Fed and would be possibly caught by surprise on a sharp move higher in price. We think that a short-squeeze into the year-end or early January is very possible.
5/ From an Elliot Wave perspective, we see this move higher as either
i. the final wave (5) to end this cycle which would see BTC breaking the previous high of 69,000
6/ ii.w or wave (B) of a corrective phase in which BTC would fail to break the previous high and then take another leg lower.
7/ Bullish divergences in ETH support our bullish bias and we expect both ETH and Altcoins to outperform on a short squeeze.
8/ We are keeping our books fairly nimble. Given our long bias and view of a possible squeeze, we are keeping long delta (spot), nett neutral vega (short vol in BTC & ETH against long vol in Altcoins) and distinctly long gamma (shorter-term options) to profit from any sharp moves
9/ (Long gamma in DOGE has performed particularly well for us this week thanks to Elon Musk's tweet)
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1/ The violent sell-off on Saturday saw BTC trade to 42,333 lows, a hefty 39% drawdown from 69,000 highs. ๐งต๐
2/ The result of weekend illiquidity against a risk-off overhang from Omicron fears, inflation concerns, the possibility of an accelerated taper and also weakness in the Chinese stock market.
3/ The China factor stands out for us as funding rates on Chinese-dominated exchanges like Huobi, OKEX and BYBIT continue to be very negative in spite of the bounce in spot off the lows.
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.
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)