Last Week Recap
- Bank of Japan intervenes in FX markets, temporarily halting the DXY rise.
- Aptos launches on multiple venues and becomes the top 3 in daily volume.
- FED starting to address slowing down rate hikes.
- NFLX earnings gave some positive momentum to the tech sector.
- VIX faded a bit last week, going from mid 30’s to high 20’s. With BoJ intervening in FX markets, equities and crypto (over the weekend) got a little relief.
- The upcoming week the market has all big tech earnings. And Russia <> Ukraine news flow has been heating up again. If there’s no definitive solution, expect VIX to stay at elevated levels all week.
Open Interest and Funding Rates
With BTC trading flat on higher time frames, all the information from OI has been on lower time frames in a repeatable fashion. The effect we’ve been seeing continuously for the last week is: Slow bleed down shorts open, short gets squeezed, slow bleed back down, rinse & repeat.
BTC Weekly View
BTC is still at support. After equities saw a squeeze with BOJ intervening in the FX market, BTC also saw a little squeeze on Sunday before the weekly close. The interesting point to note is that usually, when equities squeezed on Friday, crypto saw a continuation squeeze overnight from Friday to Saturday. Now the squeeze is lagging almost 2 days just before the weekly close. Indicating participants are hesitant to hold positions or open positions going into the weekends.
ETH Weekly View
- ETH is still relatively stronger. Were multiple ALTS are consolidating under or at the June lows, ETH is still above the range it formed in June. Most likely, there’s still relative mispricing in its inflation reduction. This makes it “easy” for the market to support the daily issuance.
- Next, ETH is also garnering strength from the ratio outperformance against BTC (See next part), indicating speculators are still more interested in ETH & its application. Even though the market has been weak, some DEFI projects have been “relatively” strong.
- As mentioned last week, it did seem like ETH/BTC was garnering strength. With a good breakout over the weekend, this could signal quite a bit of upside for the ratios in BTC.
- This week is also ETH’s last large option expiry (Likely from the merge trade positioning). This should lead to more free-flowing prices and the end of the compressed range.
TOTAL2 – USD Market Strength
TOTAL2 is still consolidating under the 2021 lows & trendline. With BTC pairs shaping up stronger, this likely results in BTC having low volatility for the upcoming period or breaking down and getting more range-bound action lower while ALTS run on relative strength.
TOTAL2BTC – BTC Market Strength
TOTAL2/BTC also show the possible rotation upwards, which ETH already set in motion. A breakout here leads to price discovery on BTC ratio’s after nearly 5 years! As mentioned in the previous part, this likely is only possible if BTC stays in a state of prolonged low volatility or breaks down into a new range. It’s unlikely that BTC will go up in a violent fashion while ALT/BTC also goes up.
Lowcaps are still struggling against their highercap counterparts. This is due to liquidity issues and low trading activities.
In the current market, the liquidity still left is rotating around just a particular set of coins at any given time (most of the time, majors that can be traded on perpetual).
*SH*TPERP/ALTPERP is a measure of speculative risk. When SH*TPERP outperforms ALTPERP, it shows a measure of speculation in the market, which shows how much risk people are willing to take at a certain time.
- Big tech earnings this week with GOOGL, AAPL, MSFT & AMZN all reporting.
- FED is in a blackout period pre-FOMC next week. This means there won’t be any speakers this week.
- FX market volatility stemming from multiple BoE & BoJ interventions has not carried materially over into equity & crypto land. However, we still expect this disconnect to end soon and a trend to again emerge.
- Multiple countries urging their citizens to leave Ukraine last week, seemingly from information that the conflict will intensify. This is still a major unknown at any given moment for the market.
- FED started to talk more dovish on Friday together with BoJ intervention. The entire market is still waiting for this real pivot. Meanwhile, they are still doing QT (shrinking their balance sheet). As long as the FED doesn’t do a real pivot, any upside should be seen as a bear market rally.
- In options space 30d, 60d & 90d BTC and ETH 25 delta risk reversals (put-call) continue to stay in positive territory over the month (puts favoured over calls indicating bearish long downside risk protection remains the prevailing sentiment).
The information in this report is for information purposes only and is not to be construed as investment or financial advice. All information contained herein is not a solicitation or recommendation to buy or sell digital assets or other financial products.