Quick Update: 9 Feb 2020
We didn’t have to wait long for the decisive move this week — Tesla’s announcement last night was unexpected in timing but definitely a big development for us. This represents the first major Fortune 500 company that will be diversifying its balance sheet into BTC & also accepting it as a mode of payment. Although the actual amount isn’t large comparatively, the signaling effect and market reflexivity of projecting other global market leading companies to do the same will have a positive spiral effect on price.
This is the catalyst we have been looking out for and the reason we’ve our short calls short-dated. On the back of this we’ve rolled our end-Feb 48k calls to end-Apr 64k for positive premium, and held off selling ETH calls further for now, even as we expect BTC to outperform all in the near-term. On the put side we’ve also rolled all our longer-term short puts at 20k and under to 24k and 28k, as we expect the 32k Elon tweet low to be the market’s line of defence from here, with 40–42k the first level for a strong reaction on any pullbacks (Chart 1).
The sharp move yesterday was primarily leveraged market driven again, and the physical market has yet to catch up (Chart 1 — Red circle). We expect a grind higher from here as the spot market plays catch up while the leveraged side levels off from the funding and futures squeeze on the news.