Research Summary
The report discusses the market reactions to the Department of Justice’s statements on Binance, with a focus on Bitcoin and Ethereum. It highlights the buying of Nov 35-36k Puts prior to the statements, the impact of Mt Gox news on ETH/BTC bid, and the potential influence of a January BTC Spot ETF decision.
Key Takeaways
Market Reactions to DOJ-Binance Statements
- Pre-Statement Panic/Play: Prior to the DOJ-Binance statements, there was strong buying of Nov 35-36k Puts, with the Spot almost fulfilling down to 35.6k. This indicates a significant market reaction to the anticipated statements.
- Post-Statement Activity: After the statements, BTC rose above 36.5k. This suggests that the market responded positively to the actual statements, with Bitcoin’s price increasing as a result.
Impact of Mt Gox News
- Stimulation of ETH/BTC Bid: The report mentions that news from Mt Gox stimulated an ETH/BTC bid. This suggests that market movements in Ethereum and Bitcoin can be influenced by external factors such as news from other entities in the cryptocurrency space.
- ETH Term-Structure Kinks: The Ethereum term-structure has some kinks in January and March, with no Ethereum approvals set. However, a Bitcoin approval could trigger an Ethereum reaction, indicating the interconnectedness of these two cryptocurrencies.
Anticipation of January BTC Spot ETF Decision
- Shift in Funds: If the market gets through Thanksgiving unscathed, the BTC term-structure will start to represent a clear January BTC Spot ETF decision bid. This involves funds moving exposure to January from December and buying January Calls for outperformance.
- Assumptions: This shift assumes two things: a SEC January decision and January IV offsets Xmas Theta. These assumptions highlight the speculative nature of the market and the potential impact of regulatory decisions on market movements.
Large Entity Taking Advantage of Jan IV Blip
- Execution Patterns: Forensics show familiar patterns in terms of execution as one large entity has decided to take advantage of the January IV blip and sell January 2.4k Calls, possibly some December 2.2+2.3k Calls too, while also short-covering in November 1.65-1.75k Calls.
Actionable Insights
- Monitor Regulatory Announcements: The market’s reaction to the DOJ-Binance statements underscores the importance of keeping an eye on regulatory announcements and understanding their potential impact on the market.
- Consider External Influences: The impact of Mt Gox news on the ETH/BTC bid highlights the need to consider external influences when analyzing market movements.
- Anticipate Market Reactions to Regulatory Decisions: The anticipation of a January BTC Spot ETF decision and its potential impact on the market suggests the need to anticipate market reactions to regulatory decisions.
- Understand Market Patterns: The execution patterns of a large entity taking advantage of the January IV blip highlight the importance of understanding market patterns and how large entities can influence market movements.
