2022/04/05

Reduce volatility, adjust mode

Last week's actions

Major crypto assets are in correction mode after range breakout

Last week fell due to month-end, quarter-end, quarter-end selling factors

DOT (Polkadot) and LUNA (Luna Terra) outperformed

Implicit volatility remains high, and the correlation between spot price and volatility declines

Bitcoin, which broke out of its range last week and rose to $48,000, entered a correction mode before falling back to $44,200 on Friday. In addition to expectations for an Ethereum 2.0 integration, Ethereum also claims that Arthur Hayes "will eventually be valued like a perpetual bond, possibly worth 100 times the current spot price." Perhaps it has risen sharply to 3,580 Dollar. In addition, SOL (Sorana) and LUNA (Luna Terra) also significantly outperformed the broader market, recording gains of around 20-25% for the week.

Looking at trading trends, Bitcoin and Ethereum are the major sellers, while SOL (Solana), LUNA (Luna Terra) and DOT (Polkadot) are strong buys. Additionally, XTZ (Tezos) has seen strong sales. By customer category, high-frequency traders/market makers were net buying, with strong sales from overseas exchanges and individuals. By region, sales in Asia dominated.

In the crypto asset futures market, the basis has returned to calm after rising, and the 3-month basis has remained at 5-6%. The OTC lending market remained low.

In options markets, volatility has been on a downward trend, despite a temporary uptick after spot losses on Friday. Also, the reason why the 3-month options are trading less than the 2-month options may be due to the availability of options at spot prices around $40,000. Considering that Bitcoin ATM volatility had little chance of falling below 60% in the 3 months after March 2019, June ATM volatility (at the money) has fallen into the high 50% range. Buy options for players who expect mid-term upside.

Future Outlook
This week, the minutes of the FOMC meeting will be released on Wednesday, April 6, and the minutes of the ECB board meeting will be released on Thursday, April 7, with speeches by Fed officials. However, the FOMC's May rate hike has already started to be factored in and there may be no further moves. Meanwhile, the cryptoasset market is eyeing Bitcoin 2022, which will take place in Miami from Thursday, April 6 to Friday, April 9. Also, technically, I want to see if we can support Bitcoin's $44,000 and Ethereum's $3,200.

(Provided by IB Liquidity Market. This report was created by IB Liquidity Market based on data from B2C2, the world's largest crypto asset market maker.)
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