Risk Premium Returns as Cryptos Break Lower

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


BITCOIN NOT TRADING LIKE A SAFE HAVEN

As suspected, crypto remained strongly correlated with risk assets on the latest down move, rejecting key resistance zone and failing to provide any “safe haven” properties.

INSTITUTIONAL BUYING LENDING SOME SUPPORT

We have started to see a turn in ETF flows suggesting some institutional buying recently and this may also explain why we haven’t retested the Januray lows.

SIGNS OF SHORT TERM DOWNSIDE EXHAUSTION

Personally I think crypto is getting close to putting in a short term bottom as sentiment is quite beaten up and speculative length has been largely unwound on Russia fears.

ON-CHAIN METRICS

Key takeaways from the BTC on-chain metrics this week:

1. Number of active entities is languishing at the lower end of of an upward sloping channel, suggesting many shorter term players have thrown in the towel.

2. Short term cost basis in the 42k to 50k range has likely led to some panic selling on Russia fears.

3. Losses held by STH in proportion to BTC market…

CRYPTO VOL ANALYSIS

We are seeing a significant implied/realized spread after short dated implied vol spiked on Russia concerns. This has not really been seen for a while as vols have been trading very depressed due to selling flows without some exogenous event to keep people fearful.


Filmed on on Tuesday 22nd February 2022.


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