This week saw improving macro sentiment as slowing U.S. inflation bolstered confidence, pushing equities closer to all-time highs. The ongoing global monetary easing, highlighted by continued rate cuts from central banks like the RBNZ, further supported this optimistic outlook.
However, the market was shaken by fears of potential selling by the U.S. government, following the transfer of 10,000 BTC (approximately $591 million) linked to the Silk Road to a Coinbase wallet. Although there’s no confirmation of a sell-off, the market remains cautious, with concerns over the remaining large BTC holdings.
On the political front, the absence of crypto discussions in Donald Trump’s recent interview with Elon Musk was a letdown, failing to provide the anticipated catalyst for the crypto market.
In the equities space, optimism reigns as U.S. stocks hit all-time highs, driven by momentum traders and corporate share buybacks, which have surged to $1.15 trillion this year. However, the crypto market diverged, with BTC perpetual funding rates plummeting to -13%, the lowest since 2022.
The market remains on edge ahead of Fed Chair Powell’s Jackson Hole speech, with rumors of a significant downward revision in payroll growth. The market is currently pricing in multiple rate cuts through 2025, and Powell’s comments could either fuel the ongoing rally or trigger a correction.
Despite these uncertainties, the resilience of BTC and ETH to recent supply-shock headlines is encouraging, with BTC currently trading above $61,800, driven by strong buying on Coinbase.
Key Trades and Market Activity:
Across the options markets, we observed a consistent trend of call buying and calendar spreads, signaling that traders are positioning for upward momentum in BTC and ETH. This is reflected in several large trades, particularly in BTC, where call spreads and call calendars were actively bought.
● BTC Structures Blocked:
○ Significant call buying activity was observed, with a 200 BTC 13-Sep-24 70,000/27-Sep-24 70,000 Call Calendar bought, indicating expectations for a price increase within that period.
○ There was also notable buying of Bear Risk Reversals and Put Calendars, suggesting some hedging against downside risks.
○ Other key trades included the purchase of a 25-Oct-24 75,000 / 86,000 Call Spread (100 BTC) and multiple Call Calendar structures, indicating a bullish sentiment with an eye on strategic timing.
● ETH Structures Blocked:
○ ETH also saw strong call buying, particularly in the 27-Sep-24 3,100/3,500 Call Spread (1,300 ETH), signaling expectations of a significant move upwards in the coming month.
○ Put Calendar trades, such as the 30-Aug-24 2,400 / 6-Sep-24 2,300 (1,000 ETH), were also prominent, indicating some defensive positioning or volatility play.
○ Overall, the options market for ETH reflects a balance between bullish sentiment and caution, with both calls and puts being actively traded.
Spot prices have remained relatively stable, with BTC hovering around $60,500 to $61,800 and ETH at $2,600 as of the latest sessions. The SEC’s rejection of Cboe’s filings for spot Solana ETFs has rekindled concerns about SOL’s classification as a security, contributing to mixed flows in the market. Meanwhile, the FOMC minutes aligned with market expectations, indicating a potential easing of policy in the near term, further boosting risk sentiment.
As the market looks ahead to Powell’s Jackson Hole speech, the interplay between macroeconomic signals and digital asset market dynamics will be pivotal in determining short-term trends. The 2024 Democratic Party Platform’s omission of crypto mentions adds another layer of political uncertainty, contrasting sharply with the Republican stance.
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