Crypto loses its downside volatility, but for how long?

In this week's Crypto Insight I discussed...


BITCOIN RANGEBOUND

BTC has established a short-term trading range of 38-42k. A crypto specific news driver has been the launch of more algorithmic stablecoins, which similar to LFG will need to buy BTC in their treasury, this has likely supported prices. Broad macro weakness and risk asset correlation is still weighing on crypto markets as higher yields and withdrawal of liquidity will impact high beta assets.


ETH RELATIVE RESILIENCE

ETH was also dragged lower by BTC but bounced nicely from 2800 support zone. On a more positive note, NFT sales jumped in April which should raise fees and hence increase the burn rate thereby lowering net new issuance. Speculation is building around a Q3 timeline of The Merge, this can be seen in options markets.


ON-CHAIN METRICS

Key takeaways from the BTC on-chain metrics this week: 1.Perpertual futures funding rates and cash & carry yields have been persistently low (less than 3%) motivating capital to leave BTC space as tradFi yields have increased. 2. Transactions above $10m have maintain around 40% share of transfer volume, showing decent insto adoption remains. 3.Implied valuation based on…


CRYPTO VOL ANALYSIS

Realised vol in crypto has remained very muted despite higher vol in equities and rates. BTC 1-week realized around 45% and ETH 50%. Implied realized gaps have widened to around 10 vols as the front end popped on the selloff late last week and into Monday.


CRYPTO OPTIONS FLOWS

Decent volumes trading, especially yesterday as vols popped and markets tested bottom of the range. Initially puts bought, Apr 38k, May 34k. Last week decent May 48k/Jun 60k call calendar bought as bullish trade.


Filmed on on Tuesday 26th April 2022.


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