Research Summary
The article discusses the recent trends in Bitcoin and Ethereum options flows. After a sudden surge in Bitcoin prices, there was a significant increase in volatility, with overnight Bitcoin implied volatilities rising from 40% to 60%. This led to a scramble among dealers to manage risk and an increase in volatility buyers. Ethereum options flows were more muted, with a slower increase in implied volatilities. The article suggests that the positioning in the market was broadly inconvenient, leading to a large amount of volatility being bought. The article also notes that the appetite for incremental Ethereum upside has been outstripped by call sellers.
Actionable Insights
- Bitcoin prices and volatility surged: The article notes a sudden surge in Bitcoin prices and a significant increase in volatility, indicating a potential shift in market dynamics.
- Ethereum options flows were more muted: In contrast to Bitcoin, Ethereum options flows saw a slower increase in implied volatilities, suggesting different market dynamics at play.
- Market positioning was broadly inconvenient: The sudden shifts in the market exposed what appears to be broadly inconvenient positioning, leading to a large amount of volatility being bought.
- Appetite for incremental Ethereum upside outstripped by call sellers: The article notes that the appetite for incremental Ethereum upside has been outstripped by call sellers, indicating a potential bearish sentiment among market participants.
