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This week, crypto markets reacted to several significant macro events. BTC pumped past $60,000 last week following Trump’s assassination attempt, suggesting that positive news regarding Trump's potential reelection is bullish for crypto. Price continued to rally throughout the week with BTC peaking at $68,500 and ETH at $3,560. Biden's withdrawal from the presidential election had minimal impact on markets yesterday, except for a brief spike in volatility on lower timeframes. The S&P, however, took a bearish turn later in the week but still remains near its all-time high at $5,600.
Coming over to derivatives markets, we can also see numerous significant changes in market structure as well. Annualized futures rates trade higher with the basis curve showing a declining term structure. BTC annualized premiums on the front-end are near 20% and taper off to 13.5% for further expires, while ETH back-end rates trade near 11%. Funding rates for certain altcoin perpetuals also saw significant upticks, with the average 7-day rates for SOL at 10.85 basis points (118% annualized) and XRP at 21 basis points (230% annualized).
Options volatility also increased in response to bullish price action. Bitcoin implied volatilities (IVs) rose by over 12 points on the front end and 7 points on the back end. Interestingly, ETH IVs only moved about 5 points on the front end and 3 points further out, possibly indicating that previously heightened ETH vols had already priced in events like the ETF release, leading to a muted response as markets were already rich in premium. Trading activity on Paradigm for BTC and ETH structures has been dynamic, reflecting a generally bullish market. Significant trades for BTC included 490 contracts of 100K March 25 calls, 372 68K July-August calendar spreads, and 725 contracts of 70K/95K short call diagonal spreads for August-December. This pattern suggests that traders are positioning for potential upside movements while reducing cost and hedging risk through taking spread positions rather than outrights.
Over the past week, trading activity on Paradigm for BTC and ETH structures has been dynamic, reflecting a generally bullish market. For BTC, the most common strategies included buying calls, call spreads, and call calendar spreads, indicating traders' expectations for price increases. Significant trades included 490 contracts of 100,000 strike calls expiring on March 25, 2025, and 350 contracts of 70,000 strike calls for August 2, 2024. Call calendar spreads were also prevalent, such as the 372 contracts of 68,000/68,000 spreads for July 26, 2024, and August 2, 2024. There was also notable activity in straddles and puts, though these were less frequent. High-volume trades included 800 contracts of 85,000 calls for December 27, 2024, and 725 contracts of 70,000/95,000 call calendar spreads for August 30, 2024, and December 27, 2024. This pattern suggests that traders are positioning for potential upside movements while managing risk through spreads and straddles.
In the ETH market, similar bullishness was observed, with a strong focus on calls and call spreads. Noteworthy trades included 3,000 contracts of 3,700 calls for July 26, 2024, and significant activity in call spreads like the 1,500 contracts of 3,300/3,600 spreads for September 27, 2024. Custom strategies and put spreads were also present, reflecting a diversified approach to managing market expectations. High-volume trades in ETH included 7,375 contracts of 3,700/4,000 call calendars for August 2, 2024, and August 30, 2024. There were also 3,100 contracts of 3,600/3,800 call spreads for July 26, 2024. The recurring theme across these trades is a bullish market, leaning towards future price increases, with strategic use of calendar spreads to capitalize on possible price differentials. Additionally, mixed flows were observed with both outright calls and puts being bought and sold, indicating an overall bullish skew.
***Data and insights as of July 22nd, 2024 12:00:00 UTC
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