Market Update: 12 Oct 2020
Last week Square’s purchase put a nice floor in BTC right at the key trendline and 10,500 level (their average purchase price being $10,617 for 4,709 BTC). Square’s purchase and effective lobbying of other corporate treasury desks through their whitepaper will give people confidence that a 5-digit BTC price will be sustainable as an accumulation level in the medium to long-term. We expect that level to be good support as more begin leaning into the 10,000–10,500 level following this (Chart 1).
In the near-term we have a TD 9 daily sell signal tomorrow, and while it could see price rise pausing or pulling back, we remain bullish against 10,000–10,500 levels as a base for the next bounce.
On the options front we see a much more balanced open interest across the different tenors (Chart 2), but more concentrated at each big figure level — from 12,000 down to 9000 — with roughly 12k BTC notional worth at each of these 4 strikes (Chart 3).
This will further cement the big figure levels as strong support/resistance levels going forward.
Finally with the US out on their long weekend, we saw a rather muted reaction to the rather important decision by the People’s Bank of China (PBOC) to further greatly reduce the cost of shorting their currency. Outside of CNY and CNH, most other FX pairs has been largely unchanged, but we expect a larger reaction tomorrow as US comes back from their holiday. The immediate reaction will be a strengthening of the US Dollar, seeing as how the Renminbi has been one of the short USD market leaders. However in the longer-term, this represents another nail in the fiat coffin as central banks are clearly locked in their currency race to the bottom — further enforcing our longer-term BTC bullish view.
We’re already seeing some hedging of the larger event risks for the week — including both the Brexit & US stimulus deadline, with large chunks of end-week 9k Puts (3 delta) going through. We still maintain our medium-term bullish stance and prefer to continue accumulating coins through medium-term short strangles at key levels such as 9000 & 10,000, and 12,000 on the call side. The steep contango volatility curve (Chart 4) will make rolling easier should BTC move sharply either way and the need arise.
