15 Apr, 24

Weekly Crypto Market Wrap, 15th April 2024

Zerocap

Zerocap

Download the PDF

Zerocap provides digital asset liquidity and digital asset custodial services to forward-thinking investors and institutions globally. For frictionless access to digital assets with industry-leading security, contact our team at [email protected] or visit our website www.zerocap.com

This is not financial advice. As always, do your own research.

Week in review

Technicals

BTCUSD

Well, we missed the break below 65,000 the prior week, but the recent week has brought some fireworks. BTC touched just above 61,000 amidst a wave of liquidations across derivatives exchanges. The brunt of the selling was over the weekend on the back of the Iranian attacks on Israel. The fact that other markets were closed led to a greater descent than I think we otherwise would have seen. The more access to crypto assets from the broader institutional space, the more we’ll see BTC being used as a hedge, risk or “otherwise” asset when other markets are closed. We’ve normalised somewhat as Monday opened, with markets betting that the crisis can be contained. 

This could explode though – have no doubt. Tensions are high, the US is on the election trail, and alliances are being tested. Given the spotlight on Israel and Gaza, and the US response, unfortunately we may see more aggression from Iran. 

Watching the technicals, we are trending higher again after a false break of 65,000. I’ve said this time and time again over the last few months; real money buyers are continually coming in on these gaps lower, and it is primarily ETF flow-derived. And now we have a Hong Kong ETF in the wings, potentially being approved this week. This is a really, really big deal, and I genuinely think we are underpriced at these levels given the potential impact. The Hong Kong ETF opens the door for mainland China to buy Bitcoin in a regulated way. Combine this with a general slowdown in the Chinese economy, a devaluing Yuan, and less hype on the Chinese property market, you get a fairly liquid cohort all looking for alternatives. The Hong Kong spot gold ETF has recently traded at a 30% premium for this very reason. The real money BTC buyers could 10x if we get a Hong Kong ETF announcement, and it could be this week.

Key levels
65,000 / 70,000 / 73,130 (ATH!)


Spot desk 

Balanced two-way flows back in the majors, but is inflation back? 

The CPI release sent BTC down sharply in a knee-jerk reaction, which lasted less than an hour before it went on a tear and surged a solid 6%, again from buoyant real money buyers in the 60s. This resulted in the desk seeing a massive increase in offramp activity post-release due to some interesting mechanics.

Firstly, it took USDT higher as demand for the stablecoin typically increases as BTC rallies. Secondly, the hotter-than-expected CPI pushed the dollar higher and consequently sent AUD lower. This made for good offramp flow dynamics as USDTs worth in AUD was buoyed by both sides.

Ethena

Ethena Finance has been the talk of the town recently after their massive airdrop. They have also just onboarded BTC as a backing asset for USDe, which no doubt would further boost interest in the project. It’s a super interesting, yet simple concept – decentralised yields derived from centralised and decentralised exchanges. Right now, the futures basis trade is yielding strong returns – and Ethena managed to nail a $2.5B TVL. And they now have a stablecoin.

The desk has seen interest in purchasing Ethena’s USDe stablecoin, and should be able to facilitate purchase of the token shortly.


Derivatives desk
WHOLESALE INVESTORS ONLY

The sell-off over the weekend saw the basis rate get flushed out, dropping to below 7% p.a on the 30-day futures contract for BTC. We also saw the term structure flip into backwardation, with not only a spike in the front end, but also a sell-off in the back end implied volatility. 

We see this is as an interesting prospect for calendar spreads, particularly on the topside. We think short-term options are now overpriced for the halving but see value in longer-term call options, given they are at a heavy discount to levels that we have seen all year. 

Traders could sell short-term, out-the-money call options and buy longer-term out-the-money call options, giving them exposure to BTC’s upside in a structure that is made cheaper by selling options premia in the front end. This structure will benefit from the basis rate coming back up if some of the leverage that was flushed out over the weekend comes back into the system. 

Contact the derivatives team at [email protected] for more information.

What to Watch

  • The Bitcoin halving, sometime at the end of this week or the next.
  • US monthly retail sales, on Monday.
  • UK governor Bailey and Fed chair Jerome Powell speaking on Tuesday.
  • UK’s yearly CPI and governor Bailey visit to Washington, on Wednesday.
  • US unemployment claims, on Thursday.
  • UK’s monthly retail sales, on Friday.

* Index used:

  Bitcoin    EthereumGoldEquities        High Yield Corporate Bonds      CommoditiesTreasury Yields
BTCETHPAXG        S&P 500, ASX 200, VT      HYG  SPGSCIU.S. 10Y
DISCLAIMER

Zerocap Pty Ltd carries out regulated and unregulated activities.

Spot crypto-asset services and products offered by Zerocap are not regulated by ASIC. Zerocap Pty Ltd is registered with AUSTRAC as a DCE (digital currency exchange) service provider (DCE100635539-001).

Regulated services and products include structured products (derivatives) and funds (managed investment schemes) are available to Wholesale Clients only as per Sections 761GA and 708(10) of the Corporations Act 2001 (Cth) (Sophisticated/Wholesale Client). To serve these products, Zerocap Pty Ltd is a Corporate Authorised Representative (CAR: 001289130) of AFSL 340799

This material is intended solely for the information of the particular person to whom it was provided by Zerocap and should not be relied upon by any other person. The information contained in this material is general in nature and does not constitute advice, take into account financial objectives or situation of an investor; nor a recommendation to deal. . Any recipients of this material acknowledge and agree that they must conduct and have conducted their own due diligence investigation and have not relied upon any representations of Zerocap, its officers, employees, representatives or associates. Zerocap has not independently verified the information contained in this material. Zerocap assumes no responsibility for updating any information, views or opinions contained in this material or for correcting any error or omission which may become apparent after the material has been issued. Zerocap does not give any warranty as to the accuracy, reliability or completeness of advice or information which is contained in this material. Except insofar as liability under any statute cannot be excluded, Zerocap and its officers, employees, representatives or associates do not accept any liability (whether arising in contract, in tort or negligence or otherwise) for any error or omission in this material or for any resulting loss or damage (whether direct, indirect, consequential or otherwise) suffered by the recipient of this material or any other person. This is a private communication and was not intended for public circulation or publication or for the use of any third party. This material must not be distributed or released in the United States. It may only be provided to persons who are outside the United States and are not acting for the account or benefit of, “US Persons” in connection with transactions that would be “offshore transactions” (as such terms are defined in Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”)). This material does not, and is not intended to, constitute an offer or invitation in the United States, or in any other place or jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer or invitation. If you are not the intended recipient of this material, please notify Zerocap immediately and destroy all copies of this material, whether held in electronic or printed form or otherwise.

Disclosure of Interest: Zerocap, its officers, employees, representatives and associates within the meaning of Chapter 7 of the Corporations Act may receive commissions and management fees from transactions involving securities referred to in this material (which its representatives may directly share) and may from time to time hold interests in the assets referred to in this material.  Investors should consider this material as only a single factor in making their investment decision.

Past performance is not indicative of future performance.

Like this article? Share
Latest Insights

15 Apr, 24

What is the CBDC Anti-Surveillance State Act?

On May 23, 2024, the U.S. House of Representatives passed the CBDC Anti-Surveillance State Act. This legislation, introduced by Congressman Tom Emmer, aims to prevent

15 Apr, 24

Blockchain Fintech Solutions: Bridging the Ecosystems

Blockchain technology is revolutionizing the financial technology (fintech) landscape by providing innovative solutions to longstanding challenges. As the demand for more secure, transparent, and efficient

15 Apr, 24

How is Bankrupt FTX Paying Back Its Customers?

FTX, once a major player in the cryptocurrency exchange market, filed for bankruptcy in November 2022 following revelations of significant mismanagement and fraudulent activities. The

Receive Our Insights

Subscribe to receive our publications in newsletter format — the best way to stay informed about crypto asset market trends and topics.

Want to see how bitcoin and other digital assets fit into your portfolio?

Contact Us
Ready to sign up?
Create an Account