2 Apr, 24

Weekly Crypto Market Wrap, 2nd April 2024



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This Market Wrap edition was released on a Tuesday due to the Easter holidays in Australia.

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

Week in review


Happy Easter – hope the bunny brought some fun. 

The ISM data overnight certainly didn’t bring much fun, pulling risk assets and bonds down, and putting further pressure on risk parity portfolios. All eyes are still on the Fed’s monetary timeline, and last night’s data has brought the probability of a cut in June below 50%.

BTC feeling the pressure, more so than stocks. 

We are currently finding some support on the ascending trendline from early Feb 2024 (65,500 level), but it’s looking like a break lower at this stage. Next level would be 60,000 and below this a fairly exposed liquidity gap down to 53,000. Do we get down here? There are still huge swathes of real money buyers below 65,000, but ultimately macro forces will dictate capital flows until we get real signs of sustained dovish sentiment from the Fed. 

The biggest risk to a move into the 50s is outlier (high) unemployment figures at the Friday Non-Farm Payroll event. The stagflation narrative could ignite further downside into the weekend when other markets are closed.

Key levels
53,000 / 65,500 / 69,000 / 70,000 / 80,000

Spot desk 

The desk saw a heavy skew towards crypto off-ramp flows into fiat as AUD grinded lower throughout the week. 

Volatility contraction in BTC 

BTC saw the entire week consolidating within a tight range of ~4% as investors took a breather after the volatility of the previous week which had the FOMC meeting. Only overnight did we see the blow-off on the back of the ISM data.

Coinciding with this, BTC’s weekly volume has also tapered pretty significantly to its lowest since a few weeks back when it decisively broke through 53k and made the huge run-up. Such dynamics are classic tell-tale signs of the market building up energy for a strong move – this time leading price the other way.

The desk is seeing balanced two-way flows for BTC at these levels, particularly from spot buyers shorting the perpetual futures to capture the funding arb. As we write, Deribit has turned a negative funding rate – keep an eye on those positions!

Solana mania 

As the Solana frenzy continues, we have had clients express interest in trading meme coins such as SLERF and WIF. The desk is positioned to facilitate best execution in these tokens as well, although watch the NFP figures on Friday – as these could turn even the best meme coins southward.

BUIDL and Real World Assets 

Post the launch of BlackRock’s BUIDL on 20 March, we have seen tokens linked to Real World Assets (RWA) skyrocket as this adoption by the world’s largest asset manager sparks newfound interest in the possibilities that RWA technology could bring to financial markets.

Tokens like ONDO, OM, and POLYX have been outperformers amongst altcoins in the past two weeks. 

In regards to this thematic, we saw some profit-taking in tokens like OM, which has rallied ~100% since two weeks ago.

Derivatives desk

BTC and ETH 30-day Basis rates surged to highs of 39% and 40% (annualised) over the Easter weekend – indicating a heightened level of leverage in the current market structure, that is now blowing off some steam.

With risk-off sentiment starting to creep in, it might be worth considering a collar structure to protect from downside on spot holdings. The high basis rate + long-term skew towards calls means that pricing on collars is reasonably attractive at the moment.

As can be seen in the pricing above, investors can get paid a premium to protect their downside by selling an equal % of their upside.

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

What to Watch

  • ISM manufacturing PMI, on Monday (ouch).
  • US Jolts job openings, on Tuesday.
  • FED Chair Jerome Powell speaks at Stanford, on Wednesday.
  • US Unemployment claims, on Thursday (biggie given ISM data print).

* Index used:

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

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