Recurring market commentary on what’s happening in the crypto markets, summarized by the Crypto Broker team at Crypto Finance AG.
At the moment, Bitcoin (BTC) is trading at $31,486 (-16.48% in 7 days), Ethereum (ETH) is trading at $2,379 (-14.5% in 7 days), and the spread ETH/BTC is trading at 0.07539 (+2.27% in 7 days). Also to be considered: Solana (SOL) is trading at $69.57 (-18.98% in 7 days), and Terra (LUNA) is trading at $30.55 (-64.22% in 7 days).
The total crypto market capitalisation has fallen to its lowest level in ten months. Over the course of the week, $230B left the crypto space, resulting in a global market cap of $1.5T.
Bitcoins current state
Looking at the spot side of BTC during the week, our trading desk was skewed on the sell side, with a Buy/Sell Ratio of 0.19:1. Starting at 12pm CET, our clients started buying with many limit and market orders as the market found support at $30k. From a statistical point of view, BTC returns are distributed around the mean with fat tails and skewed on the left side. Thus, today we might see a rebound but not as much as we lost yesterday. We also saw huge volumes in the market around $30k, thus calling support (at least a local support).
On the Futures side however on May 7th BTC’s Futures Open Interest (OI) on CME doubled, but the positioning of both Market Makers (MMs) and Funds is still not clear. Despite the spot rally, the bases did not really move as they are almost unchanged WoW.
While on the options side the vol market reacted quite drastically to the spot moves, with the front end of the implied volatility rallying from 60% to 90%, and the back end from 61% to 69%, thus inverting the ATM term structure. As a negative correlation, vol/spot continued, skews inched even higher (1m skew from 9% to 15%) as the market is looking for downside protection. Also, as DOVs and short-vol strategies keep being popular, it is worth looking at the maturities and the open interest profile as a vol rally is likely to squeeze many players.
Crypto market development over the last few days
- On May 4th, as soon as Powell said “75bps isn’t something FOMC is actively considering”, BTC flirted with the $40K resistance level.
- On May 5th, the Bank of England (BoE) stated that UK inflation could reach 10% in Q4, that GDP would likely be -1%, and that we would see full-year contraction in 2023. BTC neared the upper $35K resistance level.
- On May 8th, UST de-pegged for the first time and it traded as low as $0.9821. BTC traded at $33K and LUNA at $60.
- On May 10th (early CET hours), the UST de-peg continued and was trading as low as $0.6018. At the same time, BTC bridged $30k and $LUNA touched $23.48.
Looking at the Volume Profile Visible Range (VPVR):
- Support: $30k
- Resistance: $35k – $38k
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