Weekly Crypto Market Wrap, 26th August 2024

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

Week in Review

• Goldman Sachs report lowers US recession risk to 20%.
• 75% of all Bitcoin available has been “hodled” by investors for over six months.
• BlackRock and Fidelity’s spot Bitcoin ETFs rank in top 15 global ETF inflows.
• Coinbase’s BASE blockchain reaches 4 million active on-chain users.
• Tether (USDT) halts blockchain launch, cites concern over market conditions.
• Telegram founder and CEO Pavel Durov arrested in France under currently undisclosed circumstances – TON crypto down 14%.
• Jackson Hole: Fed Chair Jerome Powell reaffirmed Reserve’s commitment to 2% inflation target, indicating possible rate hikes amid global economic uncertainties.
• FOMC minutes: Fed signals rate cuts likely coming in September.
• DNC: Kamala officially accepts nomination, campaign raised $540 million since Biden stepped out of race.

Technicals & Macro

BTCUSD

We got the wedge breakout to the topside, and are trending higher to the 66,000 range low. The macro events over the past week were largely dovish – most notably Powell’s comments that the “time has come” for lower rates, cementing a cut next month. Bond traders are betting on the size of the cut, but we are clearly in dovish territory now, even if it’s a rocky ride down with upcoming data points bound to provide volatility. 

Geopolitical unrest this week should be noted, with Israel attacking Hezbollah sites in southern Lebanon over the weekend. Asian equities today (Monday) seem to be taking the cues from Powell rather than the unrest though, with a rally starting off the week. On balance, if the Middle East crisis gets worse, this is inflationary and negative for global growth, and often it’s the straw on the camel’s back that can send markets into a tailspin.

On balance though, we have strong sentiment and momentum behind the Fed and intermarket risk moves, so we expect a positive week in the absence of geopolitical escalation.  A wildcard to the topside would be Kamala Harris further outlining positive policy direction for the crypto space should she be voted in as President in November.

Source: TradingView

Key levels
50,000 / 55,000 / 66,000 / 72,000 / 73,794 (ATH!)

ETHUSD

Same comments as last week again – normally we’d call a beta play here on the back of positive risk, but BTC has the US election potentially bringing a Strategic Reserve bill into the fold so we are still short-biased on ETHBTC. The caveat to this would be the launch of a staking ETF that we think will eventually provide a dividend/income hedge that changes the dynamics of risk allocation in the listed crypto space.

Further comment from last week – the technical move higher could begin to close the breaking point gap from 3,200. I don’t think we get to highs nearly as fast as BTC, but there’s a nice technical set-up for a move higher from here in the absence of geopolitical risk this week.

Source: Tradingview

Key levels
2,100 / 2,800 / 3,600 / 4,000

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Spot Desk

We saw balanced flows between on and off-ramping activity this week, as USDT continued to trade above par most of the week. Similarly, AUD continued to rise a decent amount (2% on the week), fuelled by Jerome Powell’s dovish stance at Jackson Hole.

There was a slight pickup in trading activity in the majors, with a buy skew for BTC and ETH, and quiet flows on altcoins.

BTC consolidated for the week and broke through 61,500 on Friday on the back of the Jackson Hole symposium. We’re keen to see if the higher volatility continues throughout this week as the market looks more buoyant with a clearer policy stance from the Fed. 

The desk remains strategically positioned to offer competitively priced stablecoin/AUD and USD pairs and T+0 settlement. Corporates, exchanges and other desks are encouraged to reach out with any interest.   

Derivatives desk
WHOLESALE INVESTORS ONLY

Despite the spot moves over the weekend, basis rates for BTC and ETH are relatively unchanged for the week. 

• BTC’s 90-day annualised basis rate is currently sitting at 9.7%.
• ETH’s is 200 bps lower at 7.7%.

ETH’s skew at the front end of the curve has been showing a bias towards puts for several weeks now, and BTC’s front-end skew has been towards calls. However, BTC’s front-end skew flipped this morning and is now showing bias towards puts (meaning calls are cheaper). 

Below is a chart of the Implied Volatility spread between ETH and BTC on 30-day contracts over the last few months. 

As can be seen, there is a volatility premium priced into ETH option contracts at the moment. ETH’s entire term structure is trading at a premium to BTC which is contrary to BTC’s heavy outperformance over ETH of late. 

If one believes that (i) BTC will continue to outperform ETH and (ii) there are further legs to this recent market rally; one could sell ETH volatility and buy upside volatility on BTC. 

Hit up the derivs desk if you’d like to package an options trade like this one into a Structured Product.

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What to Watch

• US CB consumer confidence report, on Tuesday.
• German preliminary monthly CPI, US preliminary quarter GDP and unemployment claims, on Thursday.
• Canadian monthly GDP and US core PCE price index, on Friday.

* Index used:

Bitcoin	Ethereum	Gold	Equities	High Yield Corporate Bonds	Commodities	Treasury Yields
BTC	ETH	PAXG	S&P 500, ASX 200, VT	HYG	SPGSCI	U.S. 10Y

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