Research Summary
The report discusses the resilience of Bitcoin (BTC) despite political uncertainties and the recent decline in equities. It also highlights the performance of Ethereum (ETH) following the launch of its spot ETFs. The report further analyzes the volatility in the crypto market, the shift in narrative favoring BTC, and the option flows in the crypto market.
Key Takeaways
Bitcoin’s Resilience Amid Political Uncertainties
- Bitcoin’s Strength: Despite the supply from Mt. Gox entering the market and the recent decline in equities, Bitcoin has shown strong resilience. It has tested highs of $68k, with dips primarily bought. The market remains bullish, anticipating a Trump election win.
Ethereum’s Performance Post ETF Launch
- Ethereum’s Recovery: Ethereum hasn’t matched Bitcoin’s momentum but is starting to recover some ground after a positive first day of inflows on the ETH spot ETFs launched this Tuesday.
Volatility in the Crypto Market
- Lower Realized Volatility: Crypto realized volatility has drifted lower this week, settling in the mid to low 40s. In contrast, implied volatility has risen with BTC’s new narrative as a potential strategic reserve asset and ETH’s ETF launch.
Shift in Narrative Favoring Bitcoin
- Bitcoin Call Premiums Surpass Ethereum: BTC call premiums have surpassed ETH across all tenors, indicating a narrative shift. The ETH/BTC volatility spread in the front end has flipped to -5, favoring BTC.
Option Flows in the Crypto Market
- Increased Volumes: Volumes have spiked 70% to around $12Bn, with significant call buying across tenors as BTC retests $68k on Trump reserve asset rumors. ETH volumes are up 55% at $2.8Bn but still trail BTC, despite the ETF launch.
Actionable Insights
- Monitor Bitcoin’s Performance: Given Bitcoin’s resilience amid political uncertainties and market volatility, it would be prudent to keep a close watch on its performance and market trends.
- Assess Ethereum’s Recovery: With Ethereum starting to recover some ground following the launch of its spot ETFs, assessing its performance and market response could provide valuable insights.
- Understand Volatility Trends: Understanding the trends in crypto volatility, particularly the contrast between realized and implied volatility, could help in making informed decisions.
- Consider Narrative Shifts: The shift in narrative favoring Bitcoin, as indicated by BTC call premiums surpassing ETH, should be taken into account when considering market trends and strategies.
- Analyze Option Flows: The increased volumes in option flows, particularly the significant call buying as BTC retests $68k, could provide insights into market sentiment and potential trends.
