The market looks like it’s long gamma with BTC being pinned around the 40k level as we await FOMC headlines tomorrow. We agree with Paul Tudor Jones that this coming FOMC meeting will likely have a binary market reaction.
Should the Fed remain dovish, cryptocurrencies would have the most upside potential until September at least. Especially given the overselling we’ve seen relative to other macro markets since the May CPI print (Chart 1). If they’re hawkish on Wednesday, then all bets are off and we would expect the market to revisit recent lows.
The Wave 3 sell-off turned out deeper & sharper than we had initially expected — falling all the way from $59,600 on 9 May to the $30k support level within 10 days, bottoming at the big figure on 19 May. (Chart 1)
Now one month out from the Wave 3 top, technically it looks like BTC is setting a bottom for the Wave 4 rally higher.
This Wave 4 however will most likely be a slow steady consolidation grind, as the $40k level to the topside will continue to be formidable resistance in the short to medium term.
The bullish force is strong throughout the crypto world. Once again we saw a post-month end rally pushing BTC from 50k support towards the 60k level. ETH has been even stronger making new highs everyday in what seems to be an unstoppable rally into July’s catalyst event (EIP-1559).
The driving force remains the same, the wall of money from traditional finance pouring into crypto. The lightspeed growth has been the fastest of any asset class in the history of the world — a $2.2 trillion rally in just 14 months from barely $100bn last year to over $2.3 …
We were on Real Vision recently chatting with Raoul about some interesting dynamics in crypto-land. Real Vision is a must-have for anyone looking to understand the space and sign-up is free right now.
Link to the video interview:
Arbitrage was the first topic discussed, particularly how QCP started by arbitraging cross-border pricing dislocations. And in the last two weeks, by some strange coincidence, the Kimchi premium returned with a vengeance, reaching over 20%, the highest level we’ve seen since the good ol’ days of 2017–18 (Chart 1).
While restricted travel is definitely a major contributing factor to the arb…
This month’s major move has been the volatility crush we saw into the big March quarter-end expiry on Friday, with 1m ATM implieds falling from well over 100% to just 65% now (Chart 1). This largely tracks the collapse in daily realized vol, as the consolidation in spot stretched into the expiry (Chart 2).
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 (Chart 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 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 (Chart 1). Increasingly, BTC has seen a stronger correlation to risk markets since the start of the year (Chart 2), which itself is being driven by expectations around the Fed and…
Feb 2021 ends on a very weak note, with BTC about 26% down from the high of 58370 (21 Feb). But to put things in perspective, this month is still set to be the largest absolute monthly gain in BTC history (Chart 1). This also means the market is still sitting on huge unrealized profits. Last week when BTC was trading at all-time highs, the HODL mentality was pervasive, with most people we spoke to unwilling to sell anything below $150k (the level where BTC will equal Gold’s total private sector investment market cap). …