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2022/04/19

Slow development - what are the implications of options market trading? ~

Last week's highlights
  • Sold temporarily at the beginning of the week, but the follow-up trend is slow
  • Short-term volatility temporarily increased due to spot declines, but long-term volatility was stable
  • Active downside trading in the options market
  • Cryptocurrency futures market dollar basis remains flat after falling


  • Last Week's Movement Bitcoin fell from a range of $43,000 to around $39,200 earlier in the week before trading in a range over the Easter holiday. It's worth noting that the surge above $41,000 was temporary. Ethereum also returned to the $3,100 range, but was sold back like Bitcoin. Among other cryptoassets, SOL traded in a $99-$107 range, briefly dipping below $95 at the start of the week before bouncing back to $103. This is typical.

    Looking at the trading trends, we can see that Bitcoin and Ethereum are fairly balanced. Looking at other crypto assets, XLM (Stellar Rumen), MATIC (Polygon) and ADA (Cardano) were mostly bought, and it is worth mentioning that Stellar Rumen has been significantly overbought. From the perspective of customer categories, except individuals, all categories are dominated by purchases, among which overseas exchanges and family offices are particularly prominent. By region, buying in Asia and Europe/Middle East was notable, while selling in the U.S. was slightly predominant.

    The latest developments in the crypto asset futures market can be seen to follow spot price movements. The 3-month basis also fell from 3-4.25% to 2-3.5% following the drop in Bitcoin spot prices and has remained flat since then. Ethereum’s 3-month basis also fell from 2.5-3.5% to 1.5-2.5%, with a similar move since then.

    Weekly ATM (currency-denominated) volatility rose from 49% to 59% after Bitcoin fell sharply early last week. However, as 1-month ATM fluctuated steadily around 55%, 1-week ATM also dropped to 45.5% before staying in the low 50% range. Long-term options are relatively stable, with 3-month ATMs only marginally down from 65% to 62.6%. Given that put option (down-strike) trading was active on all deadlines, the expected move in the next market could be down. The ethereum options market has seen a similar move.


    Future Outlook
    Bitcoin and Ethereum fell below $40,000 and $3,000 respectively on Easter Monday, April 18, but have remained relatively stable since then. Given the downside trading in the options market, is this lull now the lull before the drop? We want to keep an eye on where market participants return after the Easter break this week.

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